Mass. AG Gets Settlements Over Insurers' Incorrect Driver Records

The newest settlements involve the practices of Arbella Mutual Insurance Company, Norfolk & Dedham Mutual Fire Insurance Company, United Services Automobile Association (USAA) and Electric Insurance Company.

Insurers in agreeing to the settlements admitted no wrongdoing.

It was alleged that the insurers violated the state's 2009 Board of Appeal statute by failing to correct at-fault accident findings that they reported to private data collection companies after the state's Board of Appeal determined that drivers were not at fault and overturned insurers' findings.

The Attorney General's Office reached similar settlements with six other auto insurance companies earlier this year.

As part of the settlements filed today in Suffolk Superior Court, the insurers have agreed to comply with the state's Board of Appeal statute going forward, make payments to the state totaling over $100,000, and correct the at-fault accident findings that they previously reported to private data collection companies.

The settlements also require the insurers to report these corrections to insurance companies that actively use information from private databases to calculate premiums for Massachusetts drivers and to make payments to any driver surcharged by such an insurer as a result of an at-fault report that a settling insurer should have corrected.

The Attorney General's Office said following the deregulation of the auto insurance market in April 2008, Hanover Insurance Group, Progressive Insurance Company, GEICO, Occidental Fire & Casually, and Ameriprise Auto & Home all began using private databases to rate Massachusetts customers.

"If this problem had not been caught and corrected, these at-fault reports could have resulted in premium overcharges to Massachusetts drivers for years to come," said Attorney General Coakley.

"We are pleased that the settling insurers cooperated with our review and agreed to reverse their at-fault reports. As we go forward in this new auto insurance marketplace, our office will continue to work to protect consumers from unfair rating practices."

The Attorney General's Insurance & Financial Services Division began its investigation of insurers' at-fault data reporting practices in October 2009 after receiving a complaint from a consumer who had allegedly been overcharged by GEICO based on an at-fault finding that Commerce Insurance Company had failed to correct.

Besides today's settlements, the attorney general reached similar settlements in February 2010 with Commerce Insurance Company, Metropolitan Property & Casualty, Liberty Mutual Insurance Company, Peerless Insurance Company, Plymouth Rock Assurance Corporation and Pilgrim Insurance Company.

The Board of Appeal is an independent board that reviews the fairness of at-fault accident findings made by insurers following an automobile accident.

The next phase of the attorney general's investigation will examine whether the insurers that are now using private databases for auto insurance rating purposes are making appropriate use of that data and whether they are respecting the Board of Appeal's determinations in calculating their customers' premiums.

Consumers who believe they may have been overcharged by insurance companies that use private databases to calculate premiums, including Hanover Insurance Group, Progressive Insurance Company, GEICO, Occidental Fire & Casually, and Ameriprise Auto & Home, were urged to contact the Attorney General's Insurance & Financial Services Division at 1-888-830-6277.