Almost half of the 119 automobile insurance companies in Maryland have been reprimanded and charged with fines by state insurance authorities during the second quarter of 2009 for mishandling of auto insurance premiums and other fees.
According to reports, Insurance authorities in Maryland fined the approximately 59 auto insurance companies nearly $400,000 in reimbursement to car owners and a total of 235,000 in penalties. Insurance authorities say that the mishandling of insurance fees came mainly as a result of the changes made to the state law during the last quarter of 2008. Although reports say that most insurance companies were honest in claiming that they were not aware of committing any error, part of the blame should go to them for not adjusting their systems in collecting premiums. Insurance experts in Maryland said that it is the job of any insurance company to know the changes made to the state law and how to bend the system to comply with the new regulations.
According to insurance insiders, the annual survey conducted by the Maryland Insurance Administration revealed that 67 out of all the insurance companies in Maryland did not follow the state laws concerning fees and taxes when vehicles were considered a total loss. The first instance of an insurance company violating state regulations was report during February 2009. The Maryland Insurance Administration hoped that other insurers would learn from the mistake. Instead, reports of more companies committing violations were filed.
According to Maryland Insurance Commissioner Ralph S. Tyler’s statement regarding the issue, the auto insurance industry seems to have neglected the implication of the time to time changes that can be made in the legislation – and this is very evident in the number of widespread violations.
Back in January 2008, changes in Maryland’s state law were made, and this includes an increase in Motor Vehicle Administration payments, title fees, and sales tax, causing an increase in insurance costs when vehicles were confirmed to be ab overall loss after a crash. Based from the new legislation, auto insurance companies are obliged to include these added costs as a part of the real cash value when determining an appropriate settlement.
After must investigation, the Maryland Insurance Administration found out that a number of companies failed to update their system. These companies did not adapt their method of computing for the vehicle’s cash value to state law revisions. Insurance agencies clearly violated the state law in not paying to pay the costs that come with tag transfers, affecting nearly 4,120 Maryland car owners.