Metropolitan Property & Casualty Insurance Company (Met P&C) — a unit of MetLife — has settled allegations in Massachusetts concerning auto insurance surcharge premiums.
It was alleged that the insurer failed to refund surcharge premiums to some auto policyholders after those surcharges were eliminated by the Commonwealth’s Board of Appeal, or otherwise removed from consumers’ driving records, after the drivers were found not at fault in car accidents.
The Commonwealth’s Board of Appeal is an independent board that reviews the fairness of at-fault accident determinations made by insurers for surcharge purposes. Once a surcharge is vacated by the Board of Appeal, insurers are required by law to refund the surcharge premium to the policyholder.
The settlement was announced Tuesday, Jan. 15, by Massachusetts Attorney General Martha Coakley. Met P&C was not immediately available for comment.
In Tuesday’s announcement, Attorney General Coakley said the agreement will mandate an audit to determine the amount of restitution owed to consumers and will block these alleged overcharges from happening in the future.
“This is another example of an auto insurance rating problem that our office discovered as a result of a consumer complaint,” Attorney General Coakley said. “While we are troubled that these overcharges occurred, we are pleased that we were able to stop this unlawful practice and protect consumers.”
Attorney General Coakley’s office said it began its investigation of Met P&C’s surcharge practices after receiving a complaint from a Massachusetts consumer whose surcharge had been vacated by the Board of Appeal in 2010. The investigation revealed that Met P&C had reportedly failed to refund the consumer more than $700 in surcharge premiums. Met P&C cooperated with the attorney general’s investigation.
Under the terms of the assurance of discontinuance filed in Suffolk Superior Court in Massachusetts last week, Met P&C will engage in a supervised audit of the relevant insurance policies to determine refund amounts and will provide restitution to consumers plus 6 percent interest.
The insurer will also pay Massachusetts $50,000 plus additional amounts depending on the results of the audit. Not all policyholders who had their surcharges vacated by the Board of Appeal are expected to be affected.
Coakley’s office said it is now investigating other insurers that write auto insurance in Massachusetts to determine whether they have engaged in similar practices.
Last September, Coakley’s office also announced that Met P&C would pay some $345,000 in restitution to consumers and $50,000 to the state as the result of an investigation alleging that policyholders with clean driving records were subject to improper “non-renewal.”
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