Massachusetts, Progressive Insurance Reach Settlement Over Wrong Rates on Site

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May 26, 2009 Tuesday 04:03 PM EST

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Massachusetts, Progressive Insurance Reach Settlement Over Wrong Rates on Site

Chad Hemenway

BOSTON

Massachusetts Attorney General Martha Coakley said Progressive Direct Insurance Co. has agreed to pay the state $120,000 to reimburse overcharged customers who were allegedly misled on the insurer's Web site.

Last May, Progressive returned to the Massachusetts automobile insurance market after the state switched to a system that allowed for competition among insurers. For 30 year prior, that state has set auto insurance rates. However, soon after the insurer's entry, the Massachusetts Association of Insurance Agents asked Insurance Commissioner Nonnie Burnes to take down the Web site of Progressive Insurance and fine the company for allegedly giving false quotes on its site.

"For competition to truly work in Massachusetts, consumers must be able to easily access accurate information about rates from insurance companies," said Attorney General Martha Coakley, in a statement. "Progressive's failure to provide correct comparison quotes harmed consumers and harmed Massachusetts' ability to introduce a competitive system in automobile insurance."

Agents in the state contacted Progressive about the errors in competitors' rates last August, they said. Progressive's Chief Executive Officer Glenn Renwick said in a letter to consumers that the company apologized for the "miscommunication." Progressive had been allegedly doubling the rates of competitors on its Web site, including the rates of Commerce Group and Liberty Mutual, two of the state's leading writers of automobile insurance (BestWire, Dec. 24, 2008). Coakley said the insurer also posted wrong rates for Arbella Mutual, another of the state's top auto insurers.

"When we discovered the errors, we shut the service down and notified the Massachusetts Division of Insurance, the Office of the Attorney General and the affected competitors," said Progressive spokeswoman Cristy Cote. "We also offered to pay the difference for those customers who bought a Progressive policy when a competitor's rate was lower, if the customer chose to switch their coverage to that competitor."

A refund will also be given to any customer charged for additional drivers listed on their policy, Coakley said. Progressive's filing with the state said it would not charge an added fee for additional insured drivers listed on the policy. Progressive will additionally send out transfer notices to the former agents of customers. This practice is supposed to be done but was not, Coakley said.

Members of the Progressive Insurance Group currently have a Best's Financial Strength Rating of A+ (Superior).

The top five writers of private passenger auto insurance in Massachusetts last year, according to A.M. Best Co. state/line data, were: Commerce Group, with a 31% market share; Safety Group, with 11.1%; Arbella Insurance Group, with 9.3%; Liberty Mutual Insurance Co., with 8.5%; and MetLife Auto & Home Group, with 6.5%.

(By Chad Hemenway, associate editor, BestWeek: [email protected])

May 28, 2009