Motorcycle insurance holders in Massachusetts are set to receive $11.1 million in refunds after three insurance companies agreed to settle allegations of overcharging their clients since 2002.
The office of Martha Coakley, Massachusetts Attorney General, pressed charges against Safety Insurance Co., Liberty Mutual Insurance Co., and Quincy Mutual Fire Insurance Co. after investigating for about a year. These companies were accused of charging premiums based on inflated vehicle values. The office said that current book values should have been used.
The settlement was filed in Suffolk Superior Court which compelled Safety Insurance to refund $7.2 million to its clients, $3.1 million for Liberty Mutual, and $800,000 for Quincy Mutual. Also, the state would also be paid $510,000 by the three companies.
The average refund amount would be about $300 for the tens of thousands of affected policyholders, while some could receive thousands of dollars.
The Attorney General was pleased that all three companies cooperated with the investigation and agreed with the settlements. However, Coakley said that this case revealed the troubling reality that overcharges happen in large frequencies which emphasizes a need for greater auto insurance transparency.
Liberty Mutual spokesman, Glenn Greenberg, said that all current and former customers will receive a rebate amounting to about $150.
Quincy Mutual Executive Vice President, Kevin Meskell, said that it was never their intention to commit this infraction. He added that they have done necessary corrections in their internal processes to ensure that clients will not get overcharged again.
Safety Insurance lawyer, Peter Rice, said that although they disagreed with the Attorney General on several points, they intend to make necessary adjustments to protect the best interests of their policyholders. Rice also expressed that many other insurers in the state that calculate premiums for motorcycles are also guilty of this same infraction.
Several motorcyclists who witnessed the proceedings welcomed the court decision. Some said that overcharging based on inaccurate valuations is committed by other insurers in the state. Some, however, raised eyebrows on the timing of the settlement since Coakley was running for a senate seat, which she lost earlier this week to Republican Scott Brown in an epic upset.
Paul Cote, an advocate for motorcyclists, said that this overcharging issue has been brought to the attention of the Attorney General’s office and the Massachusetts Division of Insurance since the early 2000’s.
Incidentally, Coakley has been active lately as she made several forceful and poignant proposals last month regarding ways to improve the auto insurance market and its rate-setting system after investigating the impact of Governor Deval Patrick’s market deregulation scheme.