The Division of Insurance announced today a financial settlement with Progressive Direct Insurance Company for $125,000 dollars. The Division of Insurance says that the company “…erroneously informed some Massachusetts consumers that they had used credit information to determine their automobile insurance rate through its website.” State regulations (211 CMR 79.05(13)) do not allow for credit information to be used in underwriting or rating of private passenger automobile insurance in Massachusetts.
Commenting on today’s decision, Commissioner Murphy made clear his view:
“Our regulations make it very clear that carriers cannot use credit information in insurance rating or underwriting for Massachusetts drivers. This is a serious violation of those regulations and the public trust. Over the past three and half years, we have created an auto insurance market that benefits Massachusetts consumers. Violations of the significant consumer protections we have in place will not be tolerated.”
The DOI says that starting in September of 2010, Progressive’s website include a link labeled “Your Credit Information,” which if a consumer selected would result in a “Personal insurance credit inquiry for (consumer’s name)” being generated. This “…explains how credit was used to calculate that consumer’s auto insurance rate and what factors in their credit history favorably and/or unfavorably affected their rate” said the Division of Insurance.
In an email response to Agency Checklists, Progressive responded by saying that it “…accidentally added a link to the quoting section of our website that directed Massachusetts consumers to a report about the use of credit in the underwriting process.” As the link is standard in other states where credit is a part and parcel of the rating and underwriting process, “We didn’t account for the Massachusetts-specific requirements, and as a result, we accidentally included the link on those state pages.” In addition, the company wanted to make clear that,
“We do not and did not use credit for rating and underwriting purposes in Massachusetts, and all of the rates we quoted were accurate. However, we may have inadvertently led some people to believe that we use credit for rating and underwriting because the link appeared on the site. We take responsibility for this and for the resulting action by the Massachusetts Division of Insurance.”
The Division of Insurance requested that Progressive remove the Personal Credit Information link from its website on November 16th and calculates that approximately 3,200 consumers in the Commonwealth visited the site and received results from the personal credit inquiry. In addition to paying the $125,000 fine and removing the Credit Inquiry Link, Progressive also will be required to contact every customer who received a credit inquiry results notification and to provide an explanation to each affected consumer explaining what happened and the opportunity to receive a free check of their credit report.
On November 23rd, Governor Patrick signed into law a restriction on the use of credit information. While similar to existing DOI regulations, the new law makes the restrictions part of the state’s permanent statutes. “The Division of Insurance has no intention of changing its regulations, but Governor Patrick’s signing of the legislation codifies and strengthens our intent to protect consumers and create a marketplace that offers choice in cost, coverage and company,” added the Undersecretary of the Office of Consumer Affairs and Business Regulation Barbara Anthony.