An auto insurance company will pay close to $345,000 in restitution to Massachusetts consumers and an additional $50,000 to the state as the result of an investigation alleging that policyholders with clean driving records were subject to improper non-renewal.
Massachusetts Attorney General Martha Coakley announced the settlement last week.
In 2010, the AG’s office began investigating Metropolitan Property and Casualty Insurance Company’s (Met P&C) termination of more than 2,600 Massachusetts auto insurance policies in violation of Commonwealth Automobile Reinsurers (CAR) rules that prohibited the non-renewal of “clean-in-three” auto insurance policies.
Under the “clean-in-three” rule, insurers cannot non-renew the policies of drivers who have not had an accident or traffic violation in the past three years.
Under the terms of the assurance of discontinuance, filed in Suffolk Superior Court, Met P&C will pay 56 consumers a total of $35,000 after their policies were allegedly terminated in violation of state law, and were unfairly assigned to the state’s more expensive residual market – the Massachusetts Automobile Insurance Plan (MAIP). The company will also pay an approximate total of $310,000 to 2,583 policyholders who were wrongfully non-renewed but found alternative insurance in the voluntary market.
Along with an additional $50,000 in payments to the state, Met P&C has agreed that it will follow CAR rules and Massachusetts statutes and regulations in the future when renewing and non-renewing Massachusetts private passenger auto insurance policies.
At the request of the AG’s office, Met P&C will also be required to provide all records necessary to demonstrate compliance with the assurance of discontinuance in the future. Officials said Met P&C has cooperated with the AG’s office’s investigation.