January 3, 2012 – Attorney General Martha Coakley’s office recently announced that the premium finance company IPFS has agreed to pay the Attorney General’s Office $82,000 for unlawful auto insurance cancellations by failing to provide required notice prior to canceling policies. The AG’s office says that approximately $62,942 will be paid to more than 50 Massachusetts consumers and small businesses in restitution while the remaining $20,000 will be paid to the Commonwealth.In addition, as part of the resolution, IPFS also will be required to modify its auto insurance cancellation procedures so that it is in compliance with Massachusetts law.
These statutory notice periods are important because together, they provide consumers and small businesses an opportunity to bring their accounts current and avoid costly interruptions to insurance coverage,” explained AG Coakley. “In these challenging economic times, we need to be particularly vigilant in monitoring and enforcing our existing legal protections for consumers and the small businesses that drive the Massachusetts economy.”
The announced settlement concerns those premium finance accounts of IPFS which originated with or were serviced by Imperial Credit Corporation (“ICC”). IPFS acquired ICC in 2010. The Attorney General alleges that ICC”… systematically issued cancellation requests to insurance companies that provided only a three day window in which the customer could attempt to bring the account current before insurance cancellation became effective.” The AG says, however, that the law actually requires premium finance companies to give at least 20 days’ notice of cancellation to the insurance company after giving 10 days’ notice to the insured stating that the premium finance company intends to cancel the financed insurance policy.
This latest announcement is part of the Attorney General;s ongoing investigation into the illegal cancellation practices of premium finance companies in the Commonwealth. Earlier this month, the Attorney General announced an agreement it had reached with two companies participating in a scheme with the Kilgore Insurance Agency.
