Four Companies to Reimburse Drivers to Settle Allegations of Auto Insurance Overcharges
AG’s Office Continuing to Evaluate Other Auto Insurance Companies’ Surcharge Practices
BOSTON – Four auto insurance companies have settled allegations that they overcharged consumers relating to auto insurance surcharges that were overturned by the state’s Board of Appeal, or otherwise removed from state driving records, Attorney General Martha Coakley announced today.
The settlements with The Premier Insurance Company of Massachusetts, Plymouth Rock Assurance Corporation, Pilgrim Insurance Company, and Massachusetts Homeland Insurance Company, filed Wednesday in Suffolk Superior Court, will mandate audits to determine the amount of restitution owed to Massachusetts consumers and will block surcharge overcharges from reoccurring.
“Our investigation has revealed troubling defects in the policy processing systems used by auto insurance companies,” AG Coakley said. “While we are pleased to have secured the return of these overcharges for Massachusetts consumers, these cases underscore the need for insurance transparency and oversight.”
The AG’s Office began its investigation after receiving a complaint from a Met P&C customer whose surcharge had been vacated by the Board of Appeal in 2010. The investigation revealed that by 2012, Met P&C failed to refund the consumer more than $700 in surcharge premium, which led to a settlement in January.
The Commonwealth’s Board of Appeal is an independent board that reviews the fairness of at-fault accident determinations made by insurance companies for surcharge purposes. Once a surcharge is vacated by the Board of Appeal, insurance companies are required by law to refund the surcharge premium to the policyholder.
Since 2003, the Board of Appeal has overturned more than 40,000 surcharges imposed by the settling auto insurance carriers, including Met P&C. A portion of policyholders who had their surcharges vacated by the Board of Appeal are expected to have been overcharged.
Under the terms of the settlements, the four insurance carriers will engage in audits supervised by the AG’s Office of the relevant insurance policies to determine refund amounts and will pay full refunds to consumers going back to 2003, plus 6 percent interest. The carriers, including Met P&C, will collectively make payments to the Commonwealth totaling $170,000, and will be required to make additional payments depending on the results of their audits.
The AG’s Office is continuing to evaluate other auto insurance companies’ surcharge practices. Consumers who paid surcharge premium to a carrier that was not refunded or was not fully refunded after the surcharge was vacated by the Board of Appeal or otherwise eliminated should call the Attorney General’s Insurance & Financial Services Division at 1-888-830-6277.
The Attorney General’s Office is investigating this matter with assistance from the Merit Rating Board. These cases are being handled by Investigations Supervisor Arwen Thoman, Mathematician Burt Feinberg, and Assistant Attorney General Glenn Kaplan, Chief of Attorney General Coakley’s Insurance & Financial Services Division.