Liberty Mutual agrees to repay $7.7 million to Minnesota policyholders in settlement with state

Liberty Mutual Insurance Co. has agreed to repay $7.7 million to more than 85,000 Minnesota policyholders over alleged violations of several state regulations.

The agreement follows an investigation by the enforcement division of the Minnesota Department of Commerce. A consent order calls on Liberty Mutual to provide refunds, credits and premium discounts to auto and home insurance policyholders.

"When consumers pay premiums for insurance policies, they are protected by state law to ensure they get what they pay for," Grace Arnold, commissioner of the Minnesota Department of Commerce, said in a statement.

The Department of Commerce alleged that Liberty Mutual failed to offer the minimum antitheft protection device discount on auto insurance policies. Liberty Mutual has refunded or credited over $2.27 million to 53,604 current and former policyholders, averaging about $42 per policyholder.

The state also charged that Liberty Mutual applied automated rate increases on auto insurance policies. Liberty Mutual will issue $2.1 million in credits and $670,000 in refunds to about 11,800 current policyholders, averaging $178 each, as well as 8,700 former policyholders who will receive an average of $77 each.

The Department of Commerce further alleged that Liberty improperly offered and established multi-policy discounts related to bundling auto and homeowners' insurance. Liberty Mutual has started refunding/crediting 7,700 current and former policyholders an estimated $2.7 million, which means an average of $350 per policyholder.

The consent order includes a $150,000 civil penalty against Boston-based Liberty Mutual. The penalty will be stayed if the company fully complies with the terms of the consent order.

As is typical in such settlements, the mutual agreement on the consent order is not an admission of guilt by the company.

According to the consent order: "The parties agree that there has been no hearing, findings of fact, or conclusions of law with respect to the listed allegations and this order represents a settlement of the parties' disputes."