Editor's note: Steven A.Meyerowitz, Esq., is a director of FC&S Legal. FC&S andPC360 are both owned by Summit Professional Networks.

Massachusetts Commissioner of Insurance Joseph G. Murphy hasreached an agreement with Government Employees InsuranceCompany and Geico General Insurance Company (together, Geico)resolving what the Division of Insurance (DOI) said wereinconsistencies in Geico's reporting of accident information tostate agencies and policyholders. 

Under the terms of the agreement, Geico has agreed to modifycertain portions of its current business procedures, implement newprocedures, and pay a $275,000 fine. An additional $275,000 finehas been suspended pending a future re-examination by the DOI, anagency within the Massachusetts Office of Consumer Affairs andBusiness Regulation.

Murphy says the agreement was "the result of our ongoingmonitoring of the insurance marketplace to ensure that consumersare receiving the benefits to which they are entitled and companiesare competing on a level playing field." He added that Geico'sactions "created disruptive issues within the auto insurancemarketplace in Massachusetts."

The DOI negotiated this agreement with Geico following a marketconduct examination of Geico's practices since the company beganoffering private passenger automobile insurance to Massachusettsdrivers in May 2009. The DOI said that its examination specificallyidentified Geico's inconsistency in reporting claim information andproviding operators proper notice of at-fault accidentdeterminations and their rights to appeal those determinations tothe DOI's board of appeal as areas requiring a change in businesspractices. Geico will notify individuals affected by these actions,including consumers who are no longer insured by Geico, within 60days.

The settlement requires Geico to amend claim informationreporting, implement new business practices to ensure operatorsdetermined at-fault receive notice of that determination and theirrights to appeal, and warrant that data reported to the MeritRating Board is effective and timely. Geico will be subject toongoing monitoring and a re-examination in the next two years,after which the DOI will levy or rescind the second fine.

Under the terms of the agreement, Geico also must:

• Properly report past claim information to the Merit RatingBoard and other insurance carriers for claims that occurred betweenMay 18, 2009 and June 1, 2013.
• Provide notice of at-fault accident determinations and theright to appeal those determinations to operators not previouslynotified of Geico's at-fault accident determinations between May18, 2009 and June 1, 2013. Operators affected by this inconsistencyin Geico's prior business practices will be allowed to appeal thosedeterminations to the DOI's board of appeal.  Consumerswho elect to appeal will have their $50 filing fee reimbursed byGeico.
• Implement new business practices to ensure that operatorsdetermined to be at-fault for accidents receive timely notice ofthe determination as well as an explanation of their rights toappeal the determination.
• Routinely audit the effectiveness of new business practicesdesigned to prevent errors and report the results to the DOI overthe next two years.

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