Edmonton auto insurer penalized

Edmonton’s Superintendent of Insurance recently issued a CD$45,000 penalty to State Farm Mutual Automobile Insurance Company, according to a release from the government of Alberta. The penalty represents a violation of The “Insurance Act,” stemming from the auto insurers failure to charge clients with premiums approved for compulsory auto insurance in relation to a new business discount.The release states that approximately 13,500 Alberta auto insurance policies were affected, resulting in 6,400 policyholders being overcharged about CD$475,000 in premiums.On June 1, 2000 State Farm introduced a 5% new business discount for auto insurance in Alberta.In September 2003, the insurer became aware the discount was not being applied to all qualifying policies as the result of administrative error. However, State Farm did not implement an action plan to correct the premium overcharges until November 2005. The company began reimbursing policyholders with interest in December 2005 and unclaimed premium refunds will be given to charity.”The penalty issued to State Farm reflects the insurer’s failure to charge the correct premiums as well as a failure to notify Superintendent of Insurance about the issue in a timely manner and to take sufficient steps to correct the problem,” according to the release. A total of 26 months passed after the premium discount error was discovered before State Farm implemented corrective action. During that time, the release indicates that policyholders continued to be overcharged.