Massachusetts consumers who purchased credit unemployment insurance from Wesco Credit Insurance Co. will be getting premium refunds under a settlement obtained by state officials.
Attorney General Martha Coakley’s office said it has reached a $100,000 settlement with the insurer regarding inflated premiums. This insurance pays for credit card or other types of recurring debts owed by consumers for a set period of time if the consumers lose their jobs.
“As these type of insurance policies become more popular given today’s economy, it is particularly important that companies treat customers fairly and not overcharge them for potentially futile products,” said Coakley. “We appreciate Wesco’s cooperation in this matter, and we will continue to review the conduct of other carriers in this marketplace.”
Coakley said her agency’s central concern related to Wesco’s loss ratio. State law requires that credit unemployment insurers charge rates that result in at least a 60 percent loss ratio, and Wesco’s premiums and rates allegedly failed to meet this standard.
In addition to paying $100,000 in refunds, Wesco will pay the state $25,000.
The attorney general’s office has been reviewing allegations that credit insurers have violated the statutory ceilings and charged customers rates beyond the levels allowed by law. In August 2010, Coakley settled with Balboa Insurance for similar conduct. Balboa paid $1.5 Million to consumers and made a $150,000 payment to the state.
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