Four auto insurers have settled allegations that they overcharged Massachusetts consumers relating to auto insurance surcharges that were overturned by the state’s Board of Appeal, or otherwise removed from state driving records, the state’s attorney general Martha Coakley announced Thursday.
The settlements with The Premier Insurance Company of Massachusetts, Plymouth Rock Assurance Corporation, Pilgrim Insurance Company, and Massachusetts Homeland Insurance Company were filed Wednesday in Suffolk Superior Court.
The settlements will mandate audits to determine the amount of restitution owed to Massachusetts consumers and will block surcharge overcharges from reoccurring.
“Our investigation has revealed troubling defects in the policy processing systems used by auto insurance companies,” Coakley said. “While we are pleased to have secured the return of these overcharges for Massachusetts consumers, these cases underscore the need for insurance transparency and oversight.”
Coakley’s office began its investigation after receiving a complaint from a Met P&C customer whose surcharge had been vacated by the Board of Appeal in 2010. The investigation revealed that by 2012, Met P&C failed to refund the consumer more than $700 in surcharge premium, which led to a settlement in January.
The Massachusetts Board of Appeal is an independent board that reviews the fairness of at-fault accident determinations made by insurance companies for surcharge purposes. Once a surcharge is vacated by the Board of Appeal, insurance companies are required by law to refund the surcharge premium to the policyholder.
Since 2003, the Board of Appeal has overturned more than 40,000 surcharges imposed by the settling auto insurance carriers, including Met P&C. A portion of policyholders who had their surcharges vacated by the Board of Appeal are expected to have been overcharged.
Under the terms of the settlements, the four insurance carriers will engage in audits of the relevant insurance policies to determine refund amounts and will pay full refunds to consumers going back to 2003, plus 6 percent interest. The audits will be supervised by Attorney General Coakley’s office.
The carriers, including Met P&C, will collectively make payments to the state totaling $170,000, and will be required to make additional payments depending on the results of their audits.
Attorney General Coakley’s office announced it is continuing to evaluate other auto insurance companies’ surcharge practices.
Source: Massachusetts Attorney General’s Office
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