AG COAKLEY OBTAINS REFUNDS FOR WESCO CREDIT INSURANCE CUSTOMERS
Company to pay $100,000 to reimburse customers and $25,000 to Commonwealth
"As these type of insurance policies become more popular given today's economy, it is particularly important that companies treat customers fairly and not overcharge them for potentially futile products," said Attorney General Martha Coakley. "We appreciate Wesco's cooperation in this matter, and we will continue to review the conduct of other carriers in this marketplace."
The Attorney General's central concern regarding Wesco'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 premiums. State law requires that credit unemployment insurers charge rates that result in at least a 60% loss ratio, and Wesco's premiums and rates allegedly failed to meet this standard.
Consumers most often purchase credit unemployment insurance coverage when they sign up for a specific credit card, or in response to an offer that accompanies a credit card bill. Rates for credit unemployment insurance cannot exceed certain statutory ceilings, which measure the amount of money paid out in claims compared to the amount of premiums collected by the insurance companies.
The Attorney General has been reviewing allegations that credit insurers have violated the statutory ceilings, and charged customers rates beyond the levels allowed by law. In August 2010, her office settled with Balboa Insurance for similar conduct. To resolve its conduct, Balboa paid $1.5 Million to consumers and made a $150,000 payment to the state.
Consumers who have questions whether they are entitled to refunds under the Wesco settlement, or questions regarding credit unemployment insurance generally, can call the Attorney General's Insurance and Financial Services Hotline at 1-888-830-6277.
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.