Erie Ordered to Pay Maryland Policyholders $2 Million

The Maryland Insurance Administration has ordered car insurer Erie to pay a portion of its customers nearly $2 million for raising their rates without giving them proper notice that they would be doing so.

The funds are being distributed among about 6,100 Maryland car insurance customers. They will be reimbursed the extra premium amounts they paid, plus 10 percent interest.

Under Maryland law, insurers are required to notify car insurance policyholders in writing of an upcoming premium increase at least 45 days before that new premium goes into effect, which two Erie companies failed to do.

According to the consent order, Erie initially reviewed the matter at the request of the administration and reported that only one of its companies had failed to send the notices and that there were only three policyholders who did not receive such notice.

After random sampling in late January 2012, though, Erie found that the issue was “systemic in nature and the issue extended to more than a single company.”

The issue turned out to be a coding error related to the expiration of discounts that left customers with higher premiums without any advance notice.

In addition to the $2 million in restitution, Erie will also be required to pay a $50,000 fine to state insurance regulators.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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