For Immediate Release - February 05, 2010

Attorney General Coakley Announces Board of Appeal Enforcement Initiative

AG Settles with Commerce Insurance Company; investigates other auto insurance carriers for alleged violations

BOSTON - Attorney General Martha Coakley's Office today announced an enforcement initiative regarding insurer failures to follow state law regarding the state Board of Appeal. As part of that initiative, the Attorney General's Office reached a settlement with Commerce Insurance Company ("Commerce") over its failure to report at-fault accident determinations made by the state's Board of Appeal to a private data collection company. The Board of Appeal is an independent board that reviews the fairness of at-fault accident determinations made by insurance companies. After an initial review, the Attorney General's Office determined that at least some insurance companies are failing to abide by a 2009 statute which requires insurance companies to report and use Board of Appeal determinations in setting consumers' premiums.

"We are pleased that Commerce worked with our office to resolve this problem," said Attorney General Coakley. "When the state legislature enacted the current Board of Appeal statute, it sent clear message that the Massachusetts Board of Appeal serves an important role in protecting consumers. Our office will continue to monitor possible violations of this statute, both to protect consumers, but also to preserve a level playing field for insurance companies."

The settlement with Commerce, which was filed today in Suffolk Superior Court, resolves allegations that Commerce failed to update at-fault accident reports to a private data collection company, as required by the statute. Under state law, Massachusetts drivers have the right to appeal an insurance company's at-fault accident determination to the Board of Appeal, which may overturn the insurance company's at-fault accident finding. Pursuant to today's settlement, Commerce will correct the at-fault determinations that it reported to the Comprehensive Loss Underwriting Exchange (a.k.a. C.L.U.E.), a privately operated database, and will make payments to those former customers who were overcharged by other insurance companies based at-fault accident determinations that Commerce should have corrected with C.L.U.E. based on the Board of Appeal's findings. Because Commerce uses the Merit Rating Board's point system rather than C.L.U.E. data to calculate premiums for most Massachusetts drivers, the premiums that Commerce charged to its own policyholders were not affected by the erroneous C.L.U.E reports. 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 Commerce's at-fault determination was overturned by the Board of Appeal.

As part of today's settlement, Commerce will reform its at-fault reporting practices and will update C.L.U.E. whenever one of its at-fault findings is overturned by the Board of Appeal. Commerce will also notify insurance companies that currently insure the affected operators to ensure that those insurance companies re-rate customers accordingly. Finally, Commerce will also make a payment of $40,000 to the Commonwealth.

This matter was handled by Investigations Supervisor Arwen Thoman and Assistant Attorney General Glenn Kaplan, both of Attorney General Coakley's Insurance & Financial Services Division.