Tuesday, October 28, 1997

GEICO ordered to refund $9.6 million to Texas auto insurance customers

AUSTIN (AP) - About 170,000 Texans are in line for refunds from their auto insurer.

Texas Insurance Commissioner Elton Bomer on Monday ordered Government Employees Insurance Co. (GEICO) to refund $9.6 million to Texas customers who purchased policies from June 30, 1995, to June 16, 1997.

Customers who renewed policies from Aug. 14, 1995, to July 28, 1997, also will get refunds.

The refund per customer is based on premiums paid and the length of each policy. The average customer will get about $56, although some will get more than $100.

According to the Texas Department of Insurance, GEICO did not properly follow past orders from Bomer regarding industry-wide rate reductions. The company also improperly included extra subsidies for some high-risk policies.

The industry-wide rate reductions are ordered annually based on the amount of money saved by insurance companies because of state laws limiting lawsuits filed against them and damages juries can order them to pay.

In return for the limits, lawmakers have Bomer to impose rate cuts on insurance companies.

"Insurance companies and the public should know that I am determined to pass through to policyholders the full benefits of tort reform, as mandated by law," Bomer said.

GEICO officials said the company did nothing wrong but agreed to the refund in order to settle the issue.

"We believe that our rates are fair. They are reasonable and they are competitive," said Jim Hitt, regional vice president for GEICO. "We just think it is best to get this situation behind us and get on with serving our customers."