OAI: GEICO Case Underscores Importance of Car Insurance Rate Regulation
January 09, 2012 Business News(PRLEAP.COM) The news that GEICO has agreed to issue refunds totaling more than $7 million to some of its Washington state policyholders after a computer error caused them to be charged too much for vehicle coverage is an example of how the rate-review process can help protect policyholders across the country, according to Online Auto Insurance.
Insurers use complicated rating formulas when determining how much to charge for a policy, and there are varying regulations from state to state regarding what types of factors can be used in those formulas, as well as how much weight they can carry. Even longstanding, top rated auto insurance companies have to get their formulas approved by regulators.
While GEICO did have their rates approved, the settlement information made available by regulators indicated that a computer glitch had changed some of the rates from their approved levels, overcharging some 25,000 customers between mid-2009 and June 2010.
According to regulators in the Evergreen State, GEICO officials caught the glitch themselves and reported it to the state insurance department, which made an agreement with the insurer to pay a fine and reimburse those affected by the glitch.
Under the terms of an agreement with the state, GEICO agreed to reimburse customers about $300 each and to pay a $100,000 fine.
To learn more about this and other coverage issues, readers can go to http://www.onlineautoinsurance.com/companies/ratings/ where they will find informative resource pages and a rate-comparison generator that can help users quickly evaluate their coverage options.