BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced on Monday that she has reached a $1.5 million settlement with an insurance company that allegedly charged inflated premiums for its credit unemployment insurance products.
Under terms of the settlement, Balboa Insurance Company will refund $1.2 million to Massachusetts customers, as well as an additional $300,000 in interest on the alleged overcharges. The company will also pay $150,000 to the State and will alter its business practices to ensure it does not charge inflated premiums.
"As this product becomes more significant given today's economy, it is particularly important that insurance companies treat customers fairly and not overcharge them," Coakley said.
"We appreciate Balboa's cooperation in this matter, and we will continue to review the conduct of other carriers in this marketplace. If consumers have questions about this type of product, they should contact our office before purchasing it."
Credit unemployment insurance works by paying credit card and recurring debt for an agreed upon period of time if someone with the insurance loses their job. Most consumers who purchase this coverage do so when they sign up for a specific credit card or by responding to an offer that accompanies a credit card bill.
By law, the rates charged for credit unemployment insurance must not exceed certain statutory ceilings, which are calculated by the amount of money paid out in claims in relation to the amount of premiums collected by the insurance companies.