Geico fined $275,000 for communication failures

The auto insurance giant is paying for delayed communication with its agencies and policyholders in Massachusetts.

Insurance News


Auto insurance giant Geico was fined $275,000 for inconsistencies in its reporting of auto accident information to its agencies and policyholders in Massachusetts, the state insurance regulator announced last week.

Massachusetts Insurance Commissioner Joseph Murphy said that the Berkshire Hathaway-owned carrier did not notify its policyholders that they were at fault for accidents in time for them to appeal decisions to the Division of Insurance’s Board of Appeal.

 “The company’s actions created disruptive issues within the auto insurance marketplace in Massachusetts,” Murphy said in a statement. “Today’s announcement is the result of our ongoing monitoring of the insurance marketplace to ensure that consumers are receiving the benefits to which they are entitled and companies are competing on a level playing field.”

Under the penalty, Geico must notify affected customers—including those who have switched carriers—that they were determined to be at fault within 60 days. Policyholders then have the right to appeal Geico’s decision to the state, after which Geico will reimburse them for the $50 filing fee.

Geico must also report past data to the Massachusetts Division of Insurance and put in place new practices to ensure they comply with the notification process in the future. If the insurer fails to make those changes within the next two years, the state may again fine the company $275,000.

According to the announcement, the agreement also requires Geico to:

• Properly report past claim information to the Merit Rating Board and other insurance carriers for claims that occurred between May 18, 2009 and June 1, 2013.

• Provide notice of at-fault accident determinations and the right to appeal those determinations to operators not previously notified of GEICO’s at-fault accident determinations between May 18, 2009 and June 1, 2013. Operators affected by this inconsistency in GEICO’s prior business practices will be allowed to appeal those determinations to the Division’s Board of Appeal. Consumers who elect to appeal will have their $50 filing fee reimbursed by GEICO.

• Implement new business practices to ensure that operators determined to be at-fault for accidents receive timely notice of the determination as well as an explanation of their rights to appeal the determination.

• Routinely audit the effectiveness of new business practices designed to prevent errors and report the results to the Division of Insurance over the next two years.
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