BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced a settlement Tuesday with Metropolitan Property & Casualty Insurance Company to resolve allegations that it failed to refund surcharge premiums.

Met P&C allegedly failed to refund premiums to automobile insurance policyholders after the surcharges were eliminated by the Massachusetts Board of Appeal or were otherwise removed from the driving records of the consumers. Once a surcharge is vacated by the BOA, an independent board that reviews the fairness of at-fault accident determinations, insurance companies are legally required to refund the surcharge premium to the policyholder.

"This is another example of an auto insurance rating problem that our office discovered as a result of a consumer complaint," Coakley said. "While we are troubled that these overcharges occurred, we are pleased that we were able to stop this unlawful practice and protect consumers."

After receiving a complaint from a Massachusetts consumer whose surcharge was vacated by the BOA in 2010, Coakley's office looked into Met P&C's surcharge practices. The company cooperated with Coakley's inquiry.

Under the terms of an assurance of discontinuance, Met P&C will take part in a supervised audit of the relevant insurance policies to determine refund amounts, provide restitution to consumers in addition to six percent interest, and pay the state $50,000 plus additional amounts depending on the audit results.

Coakley's office does not anticipate that all policyholders who had their surcharges vacated by the BOA will be affected.

Coakley's office is now looking into other insurance companies that write auto insurance in the state to determine whether or not they engaged in similar practices.

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