Massachusetts Insurance Commissioner Joseph Murphy announced Thursday an agreement with auto insurance giant GEICO to resolve inconsistencies in its reporting of auto accident information to Massachusetts state agencies and policyholders.
Under the terms of the agreement, GEICO will modify certain portions of its current business procedures, implement new procedures, and pay a $275,000 fine. An additional $275,000 fine has been suspended pending a future re-examination by the Division of Insurance.
“Today’s announcement is the result of our ongoing monitoring of the insurance marketplace to ensure that consumers are receiving the benefits to which they are entitled and companies are competing on a level playing field,” said Commissioner Murphy.
“The company’s actions created disruptive issues within the auto insurance marketplace in Massachusetts,” the commissioner said.
The Division of Insurance said it negotiated this agreement with GEICO following a market conduct examination of GEICO’s practices since the company began offering private passenger auto insurance to Massachusetts drivers in May 2009.
Regulators said the examination specifically identified GEICO’s inconsistency in reporting claim information and providing operators proper notice of at-fault accident determinations and their rights to appeal those determinations to the Division’s Board of Appeal as areas requiring a change in business practices.
Regulators said GEICO will notify individuals affected by these actions, including consumers who are no longer insured by GEICO, within 60 days.
The settlement requires GEICO to amend claim information reporting, implement new business practices to ensure operators determined at-fault receive notice of that determination and their rights to appeal, and warrant that data reported to the Merit Rating Board is effective and timely.
GEICO will be subject to ongoing monitoring and a re-examination in the next two years, after which the insurance commissioner will levy or rescind the second fine.
Under the terms of the agreement, GEICO must also:
• Properly report past claim information to the Merit Rating Board and other insurance carriers for claims that occurred between May 18, 2009 and June 1, 2013.
• Provide notice of at-fault accident determinations and the right to appeal those determinations to operators not previously notified of GEICO’s at-fault accident determinations between May 18, 2009 and June 1, 2013. Operators affected by this inconsistency in GEICO’s prior business practices will be allowed to appeal those determinations to the Division’s Board of Appeal. Consumers who elect to appeal will have their $50 filing fee reimbursed by GEICO.
• Implement new business practices to ensure that operators determined to be at-fault for accidents receive timely notice of the determination as well as an explanation of their rights to appeal the determination.
• Routinely audit the effectiveness of new business practices designed to prevent errors and report the results to the Division of Insurance over the next two years.
Source: Massachusetts Division of Insurance
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