Press Release

Press Release Insurance Agency Ordered to Pay More Than $3.5 Million for Inflating Premiums with Undisclosed “Agency Fees”

Scheme Orchestrated by Former Agent of Kilgore Insurance Agency Overcharged Small Business Owners; Defendants Ordered to Pay Customer Restitution
For immediate release:
  • Office of Attorney General Maura Healey

Media Contact for Insurance Agency Ordered to Pay More Than $3.5 Million for Inflating Premiums with Undisclosed “Agency Fees”

Jillian Fennimore

Boston — A former retail insurance agent with Peabody-based Kilgore Insurance Agency, along with the agency’s owners, have been ordered to pay more than $3.5 million in restitution and interest for overcharging clients, mostly small business owners, by padding insurance premiums with hidden “agency fees.” 

Suffolk Superior Court Judge Carol Ball entered the final judgment on Friday against Kilgore Insurance Agency, its former agent Andrew Crowther, Jr., and the agency’s owners Cyrus Kilgore and Jeffrey Kilgore. The judgment follows a 22-day trial that took place in 2012 and 2013.

“These defendants purposely and secretly increased the cost of their clients’ insurance by tacking on undisclosed and excessive agency fees,” AG Healey said. “This should serve as notice that we will guard against any company taking advantage of customers by using deceptive tactics, particularly where the price of a product is difficult to fully understand.”

The Court found that the average hidden agency fee charged was 47 percent of the insurance policy premium, while standard agent compensation is around 10 percent and takes the form of a commission paid by the insurance carrier.

These extra fees were hidden from clients in a number of ways, including by “whiting out” the actual premium cost on insurance policies and inserting instead an inflated figure that included the undisclosed agency fee. Another tactic was to withhold from clients the last page of premium finance agreements, where the cost of the premium, as set by the insurer and absent the agency fee, is typically set forth.

Under the terms of the judgment, the defendants have been ordered to pay a total of more than $3.5 million, which includes $2.2 million in restitution for nearly 100 clients, plus statutory pre-judgment interest of 12 percent per year – more than $1.3 million – from the date the AG’s office filed the lawsuit in December 2009.

In November 2011, premium finance companies Premium Assignment Corporation and FIRST Insurance Funding Corp. agreed to pay $340,000 to the AG’s Office for allegedly facilitating the defendants’ agency fee scheme. The two companies allowed the defendants to roll the hidden fees into the amount financed by clients, while clients believed they were financing only the cost of the insurance premium.

This matter was handled by Assistant Attorneys General Claire Masinton, Alex Klibaner and Matt Gendron, as well as Investigations Supervisor Arwen Thoman and Paralegal Erica Harmon, all of AG Healey’s Insurance and Financial Services Division.


Media Contact for Insurance Agency Ordered to Pay More Than $3.5 Million for Inflating Premiums with Undisclosed “Agency Fees”

Office of Attorney General Maura Healey 

Attorney General Maura Healey is the chief lawyer and law enforcement officer of the Commonwealth of Massachusetts.