For raising their rates without giving proper notice to their customers, car insurer Erie has been recently ordered by the State of Maryland through its Insurance Administration to pay a portion of its policyholders the amount of almost $2,000,000.

Around 6,100 Maryland car insurance policyholders will share the said amount to be given by Erie. Reportedly, the amount will serve as reimbursements to the insurer’s customers who have paid the extra premium as the said insurer have raised their rates without notify their policyholders in accordance with the state law in Maryland. Aside from that, the reimbursement will also include 10 percent interest.

The Maryland law regulating insurance requires insurers to notify their policyholders in writing in the event that they will increase their premiums. The notification prior to premium increase must be done 45 days before the increase shall take effect, and accordingly, two Erie companies failed to do so.

After the Insurance Administration handed down the consent order to Erie to do the said reimbursements, the insurer did a review and reported back to the Insurance Administration that only one of their companies have failed to send the notices and that only three policyholders did not received such premium increase notices.

According to Erie, the problem was systematic in nature and that it had only affected one of their companies. Erie disclosed that the problem stemmed from a coding error pertaining to the expiration of discounts to some of its policyholders which left a few of its customers with higher premiums not having any advance notice.

Aside from the restitution to its Maryland car insurance policyholders, Erie is also being asked by the state to pay fines to the state insurance regulators. The said fines will amount to $50,000. The Insurance Journal reported that Erie will be paying back its policyholders a total reimbursement of $1,999,598.