State fines GEICO for overcharging, requires insurer to refund $7.5 million
December 21, 2011
NEW — 3 p.m. Dec. 21, 2011
The state fined GEICO $100,000 for overcharging Washington customers, and the insurer agreed to refund $7.5 million by the end of the year,.
In a Wednesday announcement, state Insurance Commissioner Mike Kreidler said the excessive charges affected 25,267 customers.
“A computer database error caused the problem, which the company reported to us promptly,” he said in a statement. “GEICO has also agreed to a two-year compliance plan that includes multiple audits.”
The state suspended another $50,000 fine on the condition the Maryland-based insurance company abides by the terms of the compliance plan.
The refunds average about $300 and many have already been paid to Washington customers. 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.
In late May, GEICO representatives reported the computer error. The glitch resulted in 7 percent of the company’s Washington customers being overcharged for insurance between August 2009 and June 2011.
Fines collected by the Insurance Commissioner’s Office do not go to the agency. Instead, the money is deposited in the state’s general fund to pay for other state services.