Attorney General Martha Coakley Settles with Five Auto Insurance Companies Relating to Board of Appeal Enforcement Initiative
Companies agree to change practices and make restitution; AG's investigation continues
As part of the settlements, the involved insurance companies will reform their at-fault reporting practices and will update private database information whenever one of their at-fault findings is overturned by the Board of Appeal. The insurance companies will also notify the insurance companies that currently insure the affected drivers to ensure that those insurance companies re-rate those drivers accordingly. Finally, the settling insurers will make payments totaling over $100,000 to the Commonwealth.
Earlier this month, the Attorney General's Office announced an enforcement initiative regarding insurer failures to follow state law regarding the Board of Appeal. After an initial review, the Attorney General's Office determined that some insurance companies are failing to abide by the 2009 Board of Appeal statute which requires insurance companies to report and use Board of Appeal determinations in setting consumers' premiums. The Attorney General's Office entered into a similar settlement with Commerce Insurance Company earlier this month.
"We are pleased that the settling insurance companies cooperated with our review and agreed to work with our Office to fix this problem," said Attorney General Coakley. "The Board of Appeal plays an important role in protecting consumers by reviewing and independently determining the fairness of at-fault accident determinations made by insurance companies. If this problem had not been caught and corrected, this incorrect data might have plagued consumers and inflated their premiums for years to come."
Pursuant to the settlements, filed yesterday Suffolk Superior Court, the settling insurers will correct the at-fault determinations that they reported to the Comprehensive Loss Underwriting Exchange (C.L.U.E.), a privately operated database used to evaluate customers' driving histories, and will make payments to those former customers who were overcharged by other insurance companies. Because the settling insurers use the Merit Rating Board's point system rather than C.L.U.E. data to calculate premiums for most Massachusetts drivers, the premiums that the settling insurance companies charged to their own policyholders were not affected by the settling insurers' erroneous C.L.U.E reports. As a result, in order to be eligible for a refund, consumers must have purchased insurance from an insurance company that calculates premiums based on C.L.U.E. data after the settling insurer's at-fault determination was overturned by the Board of Appeal.
The Board of Appeal is an independent board that reviews the fairness of at-fault accident determinations made by insurance companies. The 2009 Board of Appeal statute was enacted by the state legislature on an emergency basis in April 2009, after the state's Division of Insurance announced plans to eliminate the Board of Appeal. The 2009 Board of Appeal statute mandated the continued existence of the Board of Appeal, and at the urging of the Attorney General, included a provision requiring insurers to report correct at-fault accident reports they make to private data collection companies after those at-fault findings are overturned by the Board of Appeal.
Consumers who believe that they were overcharged by an insurance company after the Board of Appeal overturned the insurance company's at fault determination are urged to contact the Attorney General's Insurance & Financial Services Division at 1-888-830-6277.
This matter is being handled by Investigations Supervisor Arwen Thoman and Assistant Attorney General Glenn Kaplan, both of Attorney General Coakley's Insurance & Financial Services Division.