A Maryland-based insurance company has been fined $100,000 after overcharging thousands of its Washington state customers.
The insurer, GEICO, is also refunding $7.5 million – plus 8 percent interest -- to the 25,267 affected auto insurance consumers by the end of the year.
“A computer database error caused the problem, which the company reported to us promptly,” said Washington State Insurance Commissioner Mike Kreidler. “GEICO has also agreed to a two-year compliance plan that includes multiple audits.”
An additional $50,000 fine was suspended, on the condition that the company abides by the terms of the compliance plan.
The refunds, many of which have already been paid, will average roughly $300. The company has been contacting active and former customers affected by the issue and expects to have all refunds paid by the end of the year.
On May 26, 2011, GEICO representatives self-reported the computer error, which resulted in 7 percent of the company’s Washington customers being overcharged for insurance between Aug. 24, 2009 and June 2011.
Fines collected by the insurance commissioner’s office do not go to the agency. The money is deposited in the state’s general fund to pay for other state services.
The complete order is posted at: http://www.insurance.wa.gov/oicfiles/orders/2011orders/11-0273.pdf.