BALTIMORE (AP) — More than 20,000 Maryland drivers will receive refunds averaging $850 after insurer Allstate Corp. was ordered to return $17.5 million for premium increases that did not comply with state law, the state insurance commissioner’s office said.
Allstate sent premium increase notices between Jan. 1, 2003, and March 1, 2005, that did not comply with state law requiring a description of the accident or violation that led to the increase, the commissioner’s office said Thursday.
The refunds were characterized by state officials as one of the largest in recent history. A $100,000 fine levied on Allstate is also just below the $125,000 limit the agency is allowed to impose.
The investigation was prompted by a series of complaints to the Maryland Insurance Administration.
“We initially received a few complaints, and when the claims department looked into it, they noticed a pattern,” Darlene Frank, a spokeswoman for the state insurance administration, told the Baltimore Sun. “The agency determined that the company was not complying with insurance code.”
Allstate was given until Oct. 3 to audit policyholder records between Jan. 1, 2003, and March 1, 2005, and make appropriate adjustments, Maryland Insurance Commissioner R. Steven Orr said.
“Governor (Robert L.) Ehrlich and I are committed to protecting Maryland consumers. We believe the foremost mission of this agency is to assure that all insurance companies doing business in Maryland obey Maryland insurance laws. It is one of the most basic consumer protections we offer and we intend to enforce it,” Mr. Orr said.
Debbie Pickford, an Allstate spokeswoman, said that all of the policyholders who received letters between Jan. 1, 2003, and March 1, 2005, advising them of an increase had a past accident or violation that warranted a rate increase.
“Maryland law requires very specific statutory language about why exactly you are raising the rates,” she said. “We regret some of the notices we sent were not in compliance with state language. As soon as we found out about it, we did everything we could to rectify it.”
Please read our comment policy before commenting.