Geico agrees to pay $6 million and change allegedly misleading and discriminatory business practices
News: 2015 Press Release
SACRAMENTO, Calif. - Geico, a large multi-line insurer licensed in California, has agreed to pay $6 million dollars and implement several changes to their business practices, as part of a settlement with the Department of Insurance. The settlement stems from a petition in which Consumer Federation of California alleged Geico's online premium quoting system was discriminatory and misleading to consumers.
"Consumers are entitled to a fair estimate, that does not misrepresent material information, and discloses fully what they are getting for their money," said Insurance Commissioner Dave Jones. "Insurers must adhere to the letter of law when developing quotes, whether in person or through an online system."
Based on information obtained through extensive testing of the Geico website, Consumer Federation of California discovered the insurer misrepresented a $100,000/$300,000 limit quote as being a lowest-limits quote, when in fact, it was not. Consumer Federation of California alleged in their petition that these higher policy limits were only quoted to certain consumers, based on their education level, occupation and gender.
Though insurers may also offer and sell policies with higher limits, California law requires insurers to offer a minimum limits policy of $15,000/$30,000. Geico's online premium quoting system was inaccurately describing quotes for higher limits as the lowest limits.
Insurance Commissioner Dave Jones issued an order approving the settlement agreement and requiring Geico to discontinue using consumers' education level or occupation to quote coverage limits, and to offer a quote for a $15,000/$30,000 policy to certain consumers for the next three years. The insurer has also agreed to submit to twice-yearly audits of their website for the next three years, to ensure they are complying with the law.
Media Notes:
- Link to settlement.
- If Geico fails to comply with the settlement agreement, the insurer will pay an additional $6 million.
Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.
