IPFS Corporation to Pay $82,000 for Unlawful Auto Insurance Cancellation Practices
Allegedly Failed to Provide Required Notice Before Canceling Policies
BOSTON – Premium finance company IPFS Corporation (“IPFS”) has agreed to pay $82,000 to resolve allegations that it illegally and prematurely canceled financed auto insurance policies belonging to Massachusetts consumers and small businesses, Attorney General Martha Coakley announced today.
“These statutory notice periods are important because together, they provide consumers and small businesses an opportunity to bring their accounts current and avoid costly interruptions to insurance coverage,” said Attorney General Coakley. “In these challenging economic times, we need to be particularly vigilant in monitoring and enforcing our existing legal protections for consumers and the small businesses that drive the Massachusetts economy.”
Today’s settlement with IPFS affects premium finance accounts originated or serviced by Imperial Credit Corporation (“ICC”). The Attorney General’s Office alleges that ICC, which was acquired by IPFS in 2010, systematically issued cancellation requests to insurance companies that provided only a three day window in which the customer could attempt to bring the account current before insurance cancellation became effective. The law, however, requires premium finance companies to give at least 20 days’ notice of cancellation to the insurance company after giving 10 days’ notice to the insured stating that the premium finance company intends to cancel the financed insurance policy.
IPFS is a premium finance company that provides loans which enable its customers to pay their insurance premiums over time. Under today’s settlement, IPFS will make payments totaling $62,042 to more than 50 Massachusetts consumers and small businesses whose policies IPFS allegedly prematurely cancelled or sought to prematurely cancel in violation of state law. It will also pay $20,000 to the Commonwealth. In addition, the company has agreed to modify its auto insurance cancellation procedures and bring the ICC unit into compliance with state statutes.
The Attorney General’s Office began its investigation of illegal cancellation practices by premium finance companies earlier this year. At this time, several other premium finance companies remain under investigation.
This matter was handled by Special Assistant Attorney General Jenny Wojewoda, Assistant Attorney General Glenn Kaplan, and Investigations Supervisor Arwen Thoman, all of Attorney General Coakley’s Insurance and Financial Services Division.