BALTIMORE, MD --- Maryland Insurance Commissioner Ralph S. Tyler announced that the Maryland Insurance Administration (MIA) has completed a year-long industry survey of 119 insurance companies regarding the mishandling of vehicle insurance claims following changes to the taxes and fees associated with the total loss of a vehicle.
Of the 119 companies, 67 of them were found to be in violation of Maryland regulations. The investigation resulted in nearly a quarter million dollars in administrative penalties and about half a million dollars paid in restitution to over 4,000 Marylanders.
"The industry as a whole seemed to miss the implication of these legislative changes," said Tyler. "We found widespread violations."
As of January 2008, the increase in sales tax, as well as an increase in motor vehicle administration fees (including title fees), resulted in a greater cost when declaring a vehicle a total loss following an accident. These additional costs are required to be added to the actual cash value of the vehicle when determining an appropriate settlement. The MIA said it discovered that insurance companies had not updated their method of calculating the vehicles' value in light of the new sales tax and title fees and had been under-compensating policyholders/claimants. In addition, many companies also failed to pay the costs associated with tag transfer as required by Maryland law.
"To date, the MIA has fined the offending companies $235,000 and has instructed them to pay a total of $442,590.38 in restitution to 4,120 Maryland citizens," Tyler said. "We are still in the process of examining seven companies, but we are committed to getting vehicle owners what they are guaranteed under the law."
The survey and investigation, which began last June, is in its final stages and should be completed in the coming months, MIA said. On average, insurance companies underpaid claims by approximately $100. All policy holders/claimants affected by the changes have already been contacted and have received their restitution money.