Massachusetts AG Sues Agency Accused of Collecting Bogus Fees

December 28, 2009

Massachusetts Attorney General Martha Coakley’s Office has filed a lawsuit against the owners and agents of a Bay State insurance agency, alleging the business pocketed $3.4 million in fees it disguised as insurance premiums.

The lawsuit names Peabody-based Kilgore Insurance Agency, its agents Andrew W. Crowther, Jr. and Kathleen J. Burke, and its owners Cyrus A. Kilgore and Jeffrey B. Kilgore.

The defendants’ undisclosed agency fees were often 50 percent to 100 percent or more of the actual premiums charged by insurance companies.

In a statement released by her office, Coakley said the accused “have repeatedly taken advantage of their customers — many of which are small, family-owned local businesses — by hiding their undisclosed and excessive agency fees.”

Prosecutors said the defendants routinely told customers the agency Agency had “shopped” the insurance market on the customer’s behalf and that the insurance policy and associated “premium” figure being recommended by the defendants was the cheapest, or only, insurance policy available.

Prosecutors also said that at no time would the defendants inform customers that this premium figure included a large agency fee for the defendants. In order to conceal these undisclosed agency fees, the defendants would routinely “white out” premium figures on actual insurance policies and replace those premium figures with inflated numbers that included the defendants’ undisclosed agency fees, the complaint asserts.

In addition to charging customers undisclosed agency fees, the defendants also allegedly forged their customers’ signatures on documents that revealed an insurance policy’s true premium, including surplus lines affidavits that were filed with the Massachusetts Division of Insurance.

The complaint further alleges the agency secured premium financing agreements for customers that deceptively included the defendants’ undisclosed agency fees as insurance premiums and, in numerous cases, the defendants altered the financing agreements to conceal their undisclosed agency fees. On certain insurance policies, the defendants allegedly charged undisclosed agency fees and “double-dipped” by also accepting commissions paid to the defendants by insurance companies.

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Source: Massachusetts Attorney General’s Office

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