Commerce Insurance agrees to $14.6M settlement
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Webster-based Commerce Insurance Co. agreed Monday to pay the state $14.6 million to settle claims that it overcharged motorcycle owners on their insurance policies.
The state attorney general’s office said the money will be used primarily to reimburse more than 40,000 policyholders with Commerce, which was acquired by Spanish insurance conglomerate Mapfre in 2008. Commerce, Massachusetts’ largest writer of automobile insurance, will also pay $325,000 to the commonwealth.
The average customer refund will be around $360, said Att. Gen. Martha Coakley, though checks will range from as little as $50 to more than $12,000. Refund checks will start being sent out later this month.
“Identifying these troubling overcharges continues to underscore the need for transparency in auto insurance rating practices, and we are pleased to have facilitated refunds for customers statewide,” Coakley said in a statement.
Commerce was accused of overcharging customers between 2002 and 2005 by not accounting for vehicle depreciation when calculating some premiums. The attorney general’s office said Commerce changed its business practices in 2005 to comply with required procedures, but still had some overcharges in 2006.
The settlement agreement is not an admission of guilt by Commerce.
“Although Commerce Insurance implemented procedures back in 2005 to address this issue, we have decided to resolve this matter,” Dan Olohan, Commerce’s general counsel, said in a statement.
Coakley said her office has reached similar settlements with 19 companies offering motorcycle insurance since 2010, generating $57.4 million in refunds for more than 150,000 customers. Worcester-based Hanover Insurance Group settled previously for $2.5 million.
Monday’s agreement with Commerce was Coakley’s largest motorcycle settlement.
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