The AG Is Conducting An Industry-Wide Evaluation Into This Issue
Attorney General Martha Coakley has settled with four Massachusetts auto insurers over allegations that they overcharged consumers via auto insurance surcharges that were overturned by the Commonwealth’s Board of Appeal and removed from their state maintained driving records.
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.
“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.”
In 2010, the AG’s office began investigating auto insurer practices with respect to surcharges after receiving a consumer complaint concerning Metropolitan Property & Casualty practices. The policyholder alleged that he was continuing to pay the surcharge fees imposed on him even though that charge had been vacated by the Board of Appeal in 2010. The results of that investigation, which led to a settlement agreement with Met P&C earlier this year, revealed that the consumer had paid more than $700 dollars extra in premium as a result of the surcharge premium.
The Premier Insurance Company of Massachusetts, Plymouth Rock Assurance Corporation, Pilgrim Insurance Company, and Massachusetts Homeland Insurance Company, pursuant to the settlement filed in Suffolk Superior Court, are the latest companies to agree to mandated audits and new procedures to prevent these future surcharges from reoccurring. The audit results will ultimately determine the amount of restitution owed to affected policyholders.
Pursuant to the settlement terms, Pilgrim, Plymouth Rock, Premier and Mass. Homeland will submit to supervised audits by the AG’s office and to pay refund amounts to both their affected policyholders and the Commonwealth based on those results which can stem from 2003 onward and will include six percent interest on top of the determined amount. In addition, the four insurers, including Met P&C, will be required to make a collective payment to the Commonwealth in the amount of $170,000 as well as possible additional payments to be determined from the audit results.