BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley has secured an order against a Peabody, Mass.-based insurance agency prohibiting them from charging so-called "agency fees," which are direct additional charges to consumers.

The preliminary injunction against Kilgore Insurance Agency, signed by Superior Court Judge Bonnie MacLeod-Mancuso, also prohibits the insurance company from transferring assets during the course of litigation, which commenced in December.

Coakley's lawsuit seeks recovery of undisclosed agency fees, civil penalties, attorney's fees and costs as well as interest. The suit also seeks to prohibit the defendants permanently from engaging in the business of insurance brokerage.

Kilgore Insurance, agents Andrew Crowther and Kathleen Burke, and owners Cyrus Kilgore and Jeffeey Kilgore, are alleged to have charge their clients, which consist mostly of small, family-owned businesses, millions of dollars in concealed agency fees. The fees, Coakley's suit alleges, were hidden by altering insurance policies and other insurance documents and by forging client signatures.

The hidden fees charged by Kilgore Insurance ranged from 40 to 50 percent of premiums and, in some instances, were greater than 300 percent of the premiums. The industry standard - 10 percent - generally takes the form of commissions from the insurance carrier, not from fees charged directly to clients.

The defendants, the lawsuit says, would bury the agency fees in the "premium" amount presented to clients, erasing the true premium figure on insurance policies and other documents and typing in the inflated "premium" prior to providing the clients with the documents.

Clients' signatures were allegedly forged on documents that would reveal the true premium, keeping such documents out of the hands of the unsuspecting clients.

In addition to prohibiting the transfer of assets, the newly announced order prohibits the defendants from charging or accepting agency fees. Instead, they are allowed to be compensated solely in the form of commission paid by the insurance carrier.

The company is also required to to refrain from signing documents on behalf of any customers without their express, written, advance approval and refrain from altering any part of the insurance policy or finance agreement prior to providing a true and complete copy to the customer.

Additionally, the order requires the insurance company to refrain from making misleading or deceptive statements to their customers, whether written or verbal, concerning the lawsuit.

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