Coakley settles with Wesco Insurance
BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced a settlement on Monday with a credit unemployment insurance product company that allegedly charged inflated premiums to consumers.
Wesco Insurance Company pays for credit card or other types of recurring debts owned by consumers for a set period of time if the consumers lose their jobs.
Massachusetts state law requires that credit unemployment insurers charge rates resulting in at least a 60 percent loss ratio. Loss ratio measures the aggregate amount of money spent paying consumer claims compared to the amount of money an insurer receives from premiums. Wesco's premiums and rates allegedly failed to meet the standard.
The company will pay $100,000 to reimburse customers and $25,000 to the state.
"As these type of insurance policies become more popular given today's economy, it is particularly important that companies treat customers fairly and not overcharge them for potentially futile products," Coakley said. "We appreciate Wesco's cooperation in this matter, and we will continue to review the conduct of other carriers in this marketplace."
Credit unemployment insurance coverage is most often purchased when a consumer signs up for a specific credit card or in response to an offer that accompanies a credit card bill. The rates for this type of insurance cannot exceed certain statutory ceilings that measure the amount of money paid out in claims compared to the amount of premiums collected by the insurance companies.
Coakley's office settled in August with Balboa Insurance for similar conduct, paying $1.5 million to consumers and a $150,000 payment to the state.