Insurance Companies to Pay $50K Penalty to Iowa

Allied Property and Casualty Insurance and six affiliated companies have agreed to pay a $50,000 penalty to the state of Iowa for overcharging on more than 1,700 Iowa auto insurance policies.

The Gazette said that coding errors caused the companies to overcharge on policies with an “accident forgiveness” feature. The problems surfaced in 2009 when the Iowa Insurance Division investigated a complaint from a policyholder.

When Allied and other companies in the Nationwide group investigated, they found the problem was an error in manually coding a “chargeable accident” that should have been under the threshold to trigger a rate increase.

Early this year, refunds totaling nearly $383,000 were made to 1,721 policyholders.

According to a settlement approved by the insurance division, the companies have since improved their training procedures.

Information from: The Gazette