Geico fined $120,000 for credit-scoring violations
Thu Jun 29, 2006 7:25 PM ET

NEW YORK, June 29 (Reuters) - Four units of auto insurer Geico Inc. have been fined $120,000 by Washington state's insurance commissioner for using an unapproved scoring model to evaluate prospective customers.

Mike Kreidler, the insurance commissioner, said on Thursday the units failed to comply with requirements, including the use of credit histories, enacted by the state legislature in 2004.

He said that as a result, 24,000 policies over a five-month period ending in November 2004 were evaluated under a scoring model that violated the new law.

Officials at Geico stopped using credit history information until a new model was approved in February 2005, and the use of such histories adversely affected only 904 policyholders scored under the unapproved model, Kreidler said.

Geico, a Chevy Chase, Maryland-based unit of Warren Buffett's insurance and investment company Berkshire Hathaway Inc. <BRKa.N> <BRKb.N>, was not immediately available for comment.

The units involved were Geico Casualty Co., Geico General Insurance Co., Geico Indemnity Co. and Government Employees Insurance Co., the insurance commissioner said. They have signed a consent order, agreeing to pay the fine and comply with filing requirements and scoring legislation, he said.