Suit filed against insurance co. for deceptive fees‏

Nick Rees Dec. 23, 2009, 8:47pm

Martha Coakley (D)

BOSTON (Legal Newsline) - Attorney General Martha Coakley has filed a lawsuit against a Peabody, Mass.-based insurance agency, its agents and its owners for undisclosed agency fees that is misrepresented as insurance premiums charged to customers.

Kilgore Insurance Agency, agents Andrew W. Crowther, Jr., and Kathleen J. Burke, and owners Cyrus A. Kilgore and Jeffrey B. Kilgore are alleged to have charged more than $3.4 million in undisclosed agency fees to customers. The fees, the complaint says, were often as much as 50 to 100 percent or more of the actual premiums charged by insurance companies. The normal agent commissions on such polices is about 10 percent.

"We allege in our complaint that these defendants have repeatedly taken advantage of their customers—many of which are small, family-owned local businesses—by hiding their undisclosed and excessive agency fees," Coakley said. "Particularly in this difficult economy, we must ensure that our businesses, especially small businesses, are not taken advantage of and continue to grow and thrive."

According to the complaint, the defendants would routinely tell its customers that it had "shopped" the insurance market on their behalf and that the insurance policy and its associated "premium" figure was the cheapest, or only, insurance policy available. Customers were never informed that the premium figure also contained a large agency fee to be paid to the defendants.

The agency fees were concealed by the defendants, who would "white out" the premium figures on actual insurance policies. They would then replace those premium figures with inflated numbers that included the fees.

The defendants are also alleged to have forged signatures from their customers on documents that revealed the insurance policy's true premium. The signatures were also forged on surplus lines affidavits filed with the Massachusetts Division of Insurance.

The defendants are further alleged to have secured premium financing agreements the deceptively included the undisclosed fees and were, in many cases, altered to conceal the fees. The defendants would also "double dip" by accepting commissions paid to the defendants by insurance companies.

The complaint seeks restitution, disgorgement, injunctive relief, civil penalties and attorney's fees.

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