Judge: Peabody insurance firm overcharged customers

April 17--PEABODY -- Nearly 100 clients of a Peabody-based insurance agency may be receiving restitution after a judge found that a former employee had overcharged them for their policies.

Kilgore Insurance Agency owners Cyrus Kilgore and Jeffrey Kilgore, and former employee Andrew Crowther Jr. were ordered to pay a total of more than $3.5 million in restitution and interest earlier this month, following a trial before Suffolk Superior Court Judge Carol Ball.

The Attorney General's office brought a civil suit against Kilgore in 2009 after the scheme was brought to its attention. The suit alleged, and the judge eventually found, that Kilgore was hiding the true cost of a policy from customers, then charging them agency fees averaging 47 percent.

The standard agency fee for an insurance policy is 10 percent, which is usually paid by the insurance company to the agency as a commission.

Most of the customers were small-business owners, who, the suit alleged, were promised that they were getting the best rates possible for their policies, or that the policy was the only one available for their needs.

The agency hid the high fees in some cases by whiting out the actual policy cost on documents provided to the customer and adding a higher number, so that policy holders did not know the true cost of their coverage, prosecutors alleged.

Other clients were not given the last page of their policies, showing the premium, prosecutors charged.

"These defendants purposely and secretly increased the cost of their clients' insurance by tacking on undisclosed and excessive agency fees," Attorney General Maura Healey said in a press release announcing the judgment. "This should serve as notice that we will guard against any company taking advantage of customers by using deceptive tactics, particularly where the price of a product is difficult to fully understand."

Courts reporter Julie Manganis can be reached at 978-338-2521, via email at [email protected] or on Twitter @SNJulieManganis.

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