Four Mass. Auto Insurers Settle After Overcharge Investigation

Several auto insurance carriers in Massachusetts agreed to settlements relating to an attorney general’s office investigation claiming the insurers failed to refund drivers for surcharges that had been cleared through a state appeals process.

Premier, Plymouth Rock Assurance, Pilgrim and Massachusetts Homeland filed settlements in Suffolk Superior Court this week that will include further audits, according to a statement from Attorney General Martha Coakley issued Thursday. Premier is also known as Travelers of Massachusetts.

Those insurers will make payments to the state totaling $170,000, not including restitution payments to policyholders required by the audits. The companies had failed to refund insurance surcharges for drivers that were cleared by the state Board of Appeal, according to investigators.

Investigation of those four companies stemmed from an earlier investigation into Metropolitan Property & Casualty (Met P&C) that closed with a settlement last month. The similar settlement included a $50,000 fine, restitution to policyholders and an audit.

The Met P&C investigation began when a policyholder successfully overturned a surcharge in a 2010 case with the Board of Appeal.

However, that policyholder brought a complaint to the attorney general’s office alleging Met P&C failed to refund the vacated surcharge. The ensuing investigation found that, by 2012, the policyholder was owed $700 in insurance surcharge premiums.

In January, investigators said the Met P&C case would spur a larger look into other insurers to “determine whether they have engaged in similar practices.

Coakley said overcharges all those cases, including the Met P&C investigation, were linked to “troubling defects in the policy processing systems” used by the insurers.

“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 said.

The audits will review surcharge cases going back to 2003, according to the attorney general’s office, which added that restitution amounts will include 6 percent interest.

The Board of Appeal has vacated more than 40,000 surcharges since 2003. The attorney general’s office said that some policyholders whose surcharges were vacated “are expected to have been overcharged.”

About John Pirro
John Pirro is a licensed fire and casualty insurance agent specializing in various aspects of the auto insurance industry. He worked in the auto body repair industry before taking a reporting position at Online Auto Insurance News.

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