Two Auto Credit Insurance Companies Agree To Premium Refunds; Ag Files Legal Action Against Another
Service Life and Old United Life to return over $15 million to affected Texans
AUSTIN - Attorney General Greg Abbott has reached a
settlement with two auto credit insurance companies that sold credit
insurance plans to Texas vehicle owners. Under the settlement announced
today, the defendants will refund unearned premiums to eligible Texas
policyholders.
In a separate case, the Attorney General took
legal action against Universal Underwriters Life Insurance Co. of
Kansas, which the state charged with retaining credit insurance
premiums from customers who paid off their auto loans ahead of schedule.
Under
the two settlements announced today, more than 46,000 Texas vehicle
owners who purchased credit insurance from Service Life and Casualty
Insurance Co. can expect premium refunds totaling $14.4 million.
Another 6,500 policyholders can expect $1.3 million in refunds from Old
United Life Insurance Companies. The premium refunds apply to vehicle
owners whose loans terminated between 2002 and 2006.
The action
filed against Universal Underwriters requests a court judgment ordering
the company to make $2.6 million in credit insurance premium refunds to
more than 10,000 Texas policyholders.
Austin-based Service Life
and Old United Life of Kansas, which both settled with the state, sold
policies that were intended to cover vehicle payments in the event the
borrower died or became disabled. The companies’ customers bought
single-premium policies which were paid in a lump sum, typically when
the customers purchased their vehicles. The full cost of the credit
insurance policy was bundled into the buyer’s vehicle loan. The
coverage period lasted through the term of the vehicle loan, in some
cases as long as six years.
Under the Texas Insurance Code,
Service Life and Old United were obligated to refund the unearned
portion of the insurance premiums to those customers who paid off their
loans ahead of schedule. The companies, however, retained the unearned
premiums.
With this settlement, five insurers have now reached
agreements with the Attorney General involving credit insurance
policies. The Attorney General originally took legal action against
eight companies, three of which are still pending. In May, Enterprise
Life Insurance Co. was the first company to offer refunds to eligible
customers under the settlement agreement with the Attorney General.
