Liberty Mutual’s Angle on $4.7M Refund Differs Slightly from Florida Regulators’
Liberty Mutual Insurance this week should complete $5.2 million in refunds, premium credits and interest payments to more than 46,000 auto insurance policyholders in Florida, the result of a market conduct examination done months after a use-and-file rate was approved, according to state regulators.
Liberty Mutual offered a slightly different reason for the refund. The use-and-file process allows carriers to make adjustments after rate changes have been approved, a LM spokesman said in an email.
“Our rates were subsequently confirmed with some modifications, necessitating the refund of some premiums to impacted customers which we are in the process of completing,” the spokesman said.
Florida Insurance Commissioner Michael Yaworsky last month signed a consent order with Liberty Mutual executives, who agreed to the refunds without contesting the findings. The order notes that the insurer submitted a use-and-file rate filing in 2021 for new and renewing auto insurance policies. The Office of Insurance Regulation approved the filing in March 2023.
Credits have been or will be issued to insureds with outstanding premium balances. Those without balances will see a refund. The credits and refunds come to an average of $114 per policyholder.
“Liberty Mutual shall not recover the approximately $1,300,000 in undercharged premiums from affected policyholders,” the order reads.
Liberty began issuing the refunds and credits in October and should complete the effort by June 15. The refunds could not be made all at once because the insurance giant’s billing system does not allow for that, the order explained.
The order does not say what discounts were amended by the company, or what alerted OIR examiners to the issue. Under Florida’s use-and-file procedures, insurers may set new rates before seeking review by regulators. If OIR disapproves, the insurer may have to issue refunds to policyholders.
In this case, though, the rate was approved. Only months later did the market conduct investigation spot the discrepancies in discounts, the OIR order shows. Liberty officials did not respond to requests for further information about that.
The OIR also required Liberty Mutual’s sister company, Peerless Indemnity Insurance, to refund $76,000 to some 879 policyholders after a similar market conduct review. Three other insurers, Gateway Insurance, Pie Casualty and Pie Insurance must refund smaller amounts, according to news reports.
This is the second time in a month that OIR’s insurer conduct reviews have made headlines. In May, OIR ordered Tampa-based Heritage Property & Casualty Insurance to pay $1 million in fines, one of the largest penalties Florida regulators have issued. The carrier had improperly handled some claims after Hurricane Ian in 2022 and had utilized unauthorized adjusters, the review said.
Four other insurers were fined smaller amounts in May.
The use-and-file system has been relatively free from controversy in Florida, but not in Georgia. In that state, state lawmakers in 2023 changed the law at the urging of Insurance Commissioner John King in 2023. He said he was caught off guard when Allstate Insurance raised auto rates by 40% without hearings or input from regulators.
The new Georgia law blocks a use-and-file from taking effect for 60 days, giving the insurance office more time to review.