Insurance Reform News

 

Auto Insurance Rate Competition Is Based on Driving Record

A broad coalition of lawmakers, consumer groups and insurance agents announced their support today at the State House for a new bill which would ensure that auto insurance rates will be based on consumers’ driving records and not on unrelated or discriminatory factors.   

The unique coalition, lead by the Chairs of the Post Audit and Oversight Committee, Senator Wilkerson and Representative Antonio Cabral, included over 70 legislators from the House and Senate representing both urban and rural communities from Cape Cod to North Adams; mayors from Boston and New Bedford; consumer groups such as MASSPIRG, The Center for Insurance Research, The Consumer Federation of America and the Massachusetts Consumers’ Coalition; and insurance agents from across the state.  

Unlike the competitive private passenger automobile insurance system that the Commissioner of Insurance is in the process of implementing effective April 1, 2008, the system established by An Act To Provide For Further Consumer Protection In Auto Insurance is based primarily on driving record and would not allow drivers to be charged more or be rejected for coverage based on factors that are proxies for income, race, occupation, and education.  The bill preserves existing consumer protections, while allowing insurers substantial leeway to compete based on driving record and other non‑discriminatory rating factors that have been used in Massachusetts for decades.   

Senator Wilkerson said, “All of us gathered here today support competition in auto insurance, but this competition must be fair, rates must be determined by driving record and not their socio-economic status of the insured. Furthermore we must insure that the traditional role of the Attorney General as protector and watchdog for consumer rights are preserved in the proposed new regulations.”

Representative Cabral said, “We are all here today in favor of competition in auto insurance, but competition must be fair.  We want to make sure auto insurers set premiums based on how we drive and not who we are.”

"For years, I have advocated that there is a need for auto insurance reform in Massachusetts, and that an individual's driving history should be the primary factor in determining his or her insurance premium," said Boston Mayor Thomas Menino.  "The legislation being filed today is a win for both consumers and the insurance companies." 

“How much we pay for auto insurance should be based on how well we drive, period. Not whether we are; a landscaper or a CEO, married or single, a graduate of high school or grad school, or, for that matter, whether we're watching tonight's game from a local bar or a luxury box at Fenway,” added Deirdre Cummings of MASSPIRG. 

“We’re here today because we’re on the front line,” said Jim Slattery, an independent agent from Abington, “We are the one’s who, under the current plans, will have to tell drivers they were rejected by an insurer or that their rates went up, even though they have a perfect driving record. This bill will really protect all good drivers across the state.”

 

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Additional information:

• AN ACT To PROVIDE FOR FURTHER CONSUMER PROTECTION IN AUTO INSURANCE 10/24/2007 (PDF)

• Leaders and Organizations in Support of: AN ACT To PROVIDE FOR FURTHER CONSUMER PROTECTION IN AUTO INSURANCE 10/24/2007 (PDF)

• Summary of AN ACT TO PROVIDE FOR FURTHER CONSUMER PROTECTION IN AUTO INSURANCE 10/24/2007 (PDF)