You can now read 5 articles in a month for free on BostonGlobe.com. Read as much as you want anywhere and anytime for just 99¢.

Auto insurers fined over surcharges

Four auto insurance carriers have agreed to pay fines totaling at least $120,000 and issue refunds to Massachusetts drivers who were hit with costly surcharges even after a state board found they were not at fault for accidents, the attorney general’s office said Thursday.

The announcement comes just two months after another insurer, Metropolitan Property and Casualty Insurance Co., a unit of MetLife Inc. of New York, struck a similar deal with the attorney general’s office and agreed to pay at least $50,000 in penalties, plus an unspecified amount in refunds.

Continue reading below

The latest deals, filed in Suffolk Superior Court this week, involve the Premier Insurance Co. of Massachusetts (better known as Travelers of Massachusetts, part of the Travelers Cos. of Hartford); Massachusetts Homeland Insurance Co. (part of Tower Group of New York); and Plymouth Rock Assurance Corp. and Plymouth Rock’s sister company, Pilgrim Insurance Co., both of Boston. Travelers and Plymouth Rock-Pilgrim agreed to pay $50,000 in penalties, while Massachusetts Homeland promised to pay $20,000.

Under the terms of the settlements, the four insurance carriers agreed to conduct audits of policies since 2003 and issue refunds to customers who were wrongly charged the surcharges, plus 6 percent interest. Depending on the audits, the companies could also be required to pay other additional fines.

In addition, the attorney general’s office is continuing to examine whether other insurers had similar problems.

“Our investigation has revealed troubling defects in the policy processing systems used by auto insurance companies,” Attorney General Martha Coakley said in a statement. “While we are pleased to have secured the return of these overcharges for Massachusetts consumers, these cases underscore the need for insurance transparency and oversight.”

Travelers spokesman Gary Griffin said the firm is “working closely with the state of Massachusetts to resolve this issue and will refund affected customers.” Griffin said the company has fixed its systems to make sure customers are charged correctly going forward.

Paula Gold, chief regulatory counsel for Plymouth Rock, said the overcharges were inadvertent and the company corrected the problem as soon as it was alerted to the issue.

“There was a glitch in our system, and we are sorry that it happened,” she said.

Massachusetts Homeland could not be reached for comment.

Coakley’s office originally began the investigation after receiving a complaint from a MetLife customer who successfully appealed a surcharge to the state’s Board of Appeal in 2010. Even after the customer won the case, MetLife failed to refund him more than $700 in surcharges.

By law, insurance companies are required to issue refunds if the Board of Appeal finds customers were not at fault for crashes. During the past decade, the board has overturned 40,000 surcharges — but the state is still trying to determine how many customers continued to be charged or did not receive refunds.

Todd Wallack can be reached at twallack@globe.com. Follow him on Twitter @twallack.
Loading comments...
Subscriber Log In

You have reached the limit of 5 free articles in a month

Stay informed with unlimited access to Boston’s trusted news source.

  • High-quality journalism from the region’s largest newsroom
  • Convenient access across all of your devices
  • Today’s Headlines daily newsletter
  • Subscriber-only access to exclusive offers, events, contests, eBooks, and more
  • Less than 25¢ a week
Marketing image of BostonGlobe.com
Marketing image of BostonGlobe.com
Already a subscriber?
Your city. Your stories. Your Globe.
Yours FREE for two weeks.
Enjoy free unlimited access to Globe.com for the next two weeks.
Limited time only - No credit card required!
BostonGlobe.com complimentary digital access has been provided to you, without a subscription, for free starting today and ending in 14 days. After the free trial period, your free BostonGlobe.com digital access will stop immediately unless you sign up for BostonGlobe.com digital subscription. Current print and digital subscribers are not eligible for the free trial.
Thanks & Welcome to Globe.com
You now have unlimited access for the next two weeks.
BostonGlobe.com complimentary digital access has been provided to you, without a subscription, for free starting today and ending in 14 days. After the free trial period, your free BostonGlobe.com digital access will stop immediately unless you sign up for BostonGlobe.com digital subscription. Current print and digital subscribers are not eligible for the free trial.