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GEICO Charged by California DOI for Steering and Underpayment
March 12, 2009

The California Department of Insurance (DOI) has charged GEICO with steering and underpayment in a "show cause" order. The insurance company now will be required to appear before the court, on a date to be determined, and show cause as to why the DOI should not order another cease-and-desist order against them.

In 2007, California insurance commissioner Steve Poizner issued an order for GEICO to cease and desist unfair or deceptive acts or practices. He also required the company to submit a labor rate survey that would be compliant with the California Insurance Code (CIC) and the California Code of Regulations (CCR) and fined them $60,000.

The documents address the issue of steering and claim there were 10 instances in which GEICO required, suggested or recommended that the customer go to a preferred repair shop, which is in direct violation of Insurance Code section 758.5. The documents also include several allegations involving a labor rate survey conducted by GEICO that was deemed non-compliant.

The commissioner is asking the courts to order a cease and desist for these new charges and for violating the previous 2007 order. Poizner also is requesting that there be a suspension of GEICO's certificate of authority for up to a year and a monetary penalty for each act mentioned in the documents.

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