Auto Insurance Company to Pay More Than $200,000 in Refunds After Allegedly Overcharging Drivers
AG’s Office Evaluating Other Auto Insurance Companies’ Practices
BOSTON – An auto insurance company has agreed to pay more than $200,000 to settle allegations that it overcharged hundreds of consumers by failing to reduce premiums as drivers gained additional years of driving experience, Attorney General Martha Coakley announced today.
Today’s settlement, filed in Suffolk Superior Court, requires Safety Insurance Company to pay $200,000 in restitution and make additional payments to automobile and motorcycle insurance policyholders pending the results of a review of accounts supervised by the AG’s Office.
“This is yet another example of an insurance company failing to calculate premiums correctly,” AG Coakley said. “While we are pleased that Safety agreed to refund the alleged overcharges, this case underscores the need for auto insurance transparency and oversight.”
Under the terms of the settlement, Safety is scheduled to refund the alleged overcharges, plus six percent interest to affected policyholders, in the fall of 2013. The settlement also requires Safety to correct its business practices and pay $45,000 to the Commonwealth. Safety cooperated fully with the investigation.
Under Safety’s private passenger auto insurance rating manual, the company was required to adjust policyholder premiums as certain drivers gained additional years of experience. However, the AG’s Office alleges that Safety failed to make many of these adjustments, called mid-term class changes, resulting in overcharges to hundreds of policyholders. Most of the allegedly affected drivers were in their teens or early twenties.
The AG’s Office is evaluating whether other insurance companies have properly adjusted policyholder premiums as inexperienced drivers gained additional years of licensure. Consumers and insurance producers can report information about these practices by calling the Attorney General’s Insurance & Financial Services Division at 1-888-830-6277.
Since taking office, AG Coakley has brought more than 30 cases against auto insurers, resulting in the return of over $43 million in alleged overcharges to Massachusetts consumers.
This matter is 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.