BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced settlements Thursday with four auto insurance companies that allegedly charged consumers too much for surcharges that were overturned or otherwise removed from state driving records.
Massachusetts Homeland Insurance Company, Pilgrim Insurance Company, Plymouth Rock Assurance Corporation and The Premiere Insurance Company of Massachusetts allegedly overcharged consumers for auto insurance surcharges that were overturned by the state's Board of Appeal.
Since 2003, the Board of Appeal has overturned more than 40,000 surcharges imposed by the four settling companies and Met P&C, an insurance company that settled with Coakley's office in January.
Under the terms of the settlements, the four companies will mandate audits to determine the amount of restitution owed to Massachusetts consumers and 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 looked into Massachusetts auto insurers after receiving a complaint from a Met P&C customer whose $700 surcharge premium was vacated by the Board of Appeal in 2010. The Board of Appeal is an independent board that reviews the fairness of at-fault accident determinations made by insurance companies for the purposes of surcharges. When a surcharge is vacated by the board, insurance companies are legally obligated to refund the surcharge premium to policyholders.
The four insurance carriers will determine refund amounts through audits supervised by Coakley's office and pay full refunds to consumers going back to 2003, plus six percent interest.
Massachusetts Homeland Insurance Company, Pilgrim Insurance Company, Plymouth Rock Assurance Corporation, The Premiere Insurance Company of Massachusetts and Met P&C will pay $170,000 in total to the state and will make additional payments depending on the audit results.