MASSPIRG Urges Committee to Protect
Auto Insurance Consumers
Today, MASSPIRG urged a State House committee to oppose the
many anti-consumer provisions in the recently announced changes to the state’s
auto insurance system.
In response to Insurance Commissioner Nonnie Burnes’ July 16th decision to adopt an
Assigned Risk Plan and her intentions to deregulate the auto insurance rate
setting process, the Senate established a special task force to review and
study the impacts of those decisions.
MASSPIRG’s Legislative Director, Deirdre Cummings, predicted
that without intervention, consumers will not only see their rates increase,
but will be subject to a slew of anti-pricing and underwriting practices that
have been prohibited here for over 30 years.
With $4 billion in premiums at stake, we, like all
consumers, want insurers to be able to compete, but to do so without using
unfair rating or underwriting practices, or gouging the public.
Despite its flaws, our existing auto insurance system
produced a 21 percent decrease in rates over the last three years and would
have cut rates roughly 10 percent more next year. That is because accident and
injury claims, which are the primary cause of high rates, have finally begun to
fall, and state regulation passed savings from such reductions in claims
directly to consumers. Under the new system, it’s unlikely there will be an
overall reduction as large as 10 percent.
Could the current system be improved by adopting a more
competitive plan that preserves next year’s rate decrease, protects drivers’
right to choose any insurer, and allows companies to compete for business based
on fair factors like our driving record? Absolutely. But without intervention,
that is not what Massachusetts
drivers will be getting.
MASSPIRG submitted comments previously submitted to the Commissioner
on August 1, 2007
on the key components to a “consumer –friendly competitive rating plan”. The
comments include:
1. Consumer-Friendly proposals for Competitive Rating submitted
by both MASSPIRG and the Center for Insurance Research to the Division of
Insurance, which includes 12 steps on ensuring a consumer friendly auto
insurance system.
2. Consumer Letter submitted to the Commissioner signed by
10 groups calling for a ban on the use of unfair or socio-economic factors in
rating AND underwriting
3. Letter to the National Association of Insurance
Commissioners regarding GEICO’s use of discriminatory rating and underwriting
practices
4. “The Limitations of a Competitive Auto Insurance Market:
How to Reduce Rates and Increase Insurer Profitability Simultaneously” by the
Center for Insurance Research
5. Op-Ed from the Boston Globe, July 26th 2007, “What’s Driving the
New Auto Insurance Plan” by Deirdre Cummings of MASSPIRG and Stephen D’Amato of
the Center for Insurance Research
comprating.inputfinal.8-1-07.pdf