AG Coakley Obtains Up to 90% Rate Rollback for Credit Unemployment Insurance Consumers
Company Agrees to Reduce Rates, and Keep Reductions in Place for At Least 3 Years
ABIC sells credit unemployment insurance under the brand names Chargeguard and Accountgard. Under the Assurance of Discontinuance, filed yesterday in Suffolk Superior Court, ABIC will reduce rates on its Chargeguard brand credit unemployment insurance by 45% and will reduce rates on its Accountgard brand credit unemployment insurance policies by 90%. The rate rollback is anticipated to take effect on policies starting this spring, and the new lower rates will be in effect until at least 2014. The rate rollback must be formally approved by the Division of Insurance before it can take effect.
"This insurer's rate levels were excessive," AG Coakley said. "We brought our concerns to the company and fought for customers' rights to a fair premium. Based on our review, the company agreed to rollback rates and keep rates down for the next three years. We will continue to monitor this market to protect consumers from unfair and excessive rates."
Credit unemployment insurance pays for credit card or other types of recurring debts owed by consumers for a set period of time if the consumers are laid off or otherwise lose their jobs. In general, consumers purchase the coverage either when they sign up for a specific credit card, or in response to an offer that accompanies a credit card bill.
The Attorney General's central concern regarding ABIC's rates related to the company's loss ratio. The loss ratio measures the aggregate amount of money spent paying consumer claims compared to the amount of money an insurer takes in from insurance premiums. ABIC's rate plan on average showed it would pay out less than 20 cents for every dollar taken in from consumers.
Although the Division of Insurance had previously approved ABIC's rate filing, the Attorney General believed the rates were excessive and began a review of the insurer's rating plan. As a result of the Attorney General's action, the company must re-file and roll back the excessive rates.
This matter was handled by Assistant Attorney General Peter Leight, Mathematician Burt Feinberg, and Division Chief Glenn Kaplan of Attorney General Coakley's Insurance and Financial Services Division.