Garamendi Says Hartford Overcharged

California Insurance Commissioner John Garamendi said Monday that he had begun legal proceedings against units of Hartford Financial Services Group Inc., saying the company had charged illegal fees.

Garamendi said that one of Hartford’s agents, Superior Access Insurance Services Inc., added unapproved fees, typically around $100 a policy, to the price Hartford was allowed to charge by law, and that this was done with Hartford’s knowledge. Hartford denied wrongdoing.

“Superior Access charged these fees without authorization from Hartford,” said Joshua King, a spokesman for Hartford. “We are in discussion with the California Department of Insurance to resolve this matter.” He declined further comment.

The California commissioner said thousands of commercial and personal line policyholders probably paid the extra fees on workers’ compensation and business owner package policies.

Garamendi said Superior Access, an independent agent in Irvine that sells products from Hartford, had collected the extra fees from policyholders since 2002.

By law a producer may not charge a fee in addition to the premium, Garamendi’s order said, and property and casualty premium rates must be approved by the insurance department.

The premium rates must not discriminate. When one agent collects a fee and another agent of the same insurer doesn’t, it is discriminatory, according to the order.

Also, insurance premiums are taxable and, when not reported, insurers fail to pay their full tax, the order said.

California wants Hartford to stop permitting its agents to charge a fee, reimburse the department for its costs, refund all fees illegally collected, and file amended tax returns, according to the order.