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MASSPIRG testified today before the Joint Committee on Financial Services in support of two auto insurance proposals to lower premiums and to prohibit insurers from using factors unrelated to driving record in setting premiums.
The number one complaint from consumers about their auto insurance is the high cost. The blame for the high cost belongs to Massachusetts’s ultra-high accident rate, as measured by claims data reported by the Insurance Research Council.* Massachusetts has the dubious distinction of having the highest accident rate in the country by far – an astounding 40% higher than the state with the second-highest rate, Rhode Island. Even improving our worst-in-the-nation accident rate to second worst could drop our premiums by 20%, or nearly $200 on average per car per year, producing about $800 million in statewide savings each year.
An Act to Reducing Automobile Costs and Premiums in the Commonwealth SB 522, establishes a special commission to investigate and study the impact and effects of automobile accidents in Massachusetts on automobile insurance premiums. SB 522 also requires the commission to develop a comprehensive plan to lower the state's accident rate.
MASSPIRG also called for closing a loophole in the new auto regulations that could result in premiums based more on “who you are”, rather than “how you drive”.
The new auto insurance regulations list a number of factors that insurers may not use in setting rates. Specifically, the regulations prohibit the use of: sex, race, marital status, creed, national origin, religion, age, occupation, income, education, homeownership, and credit information.
“We are concerned that many of the discounts currently being offered auto insurance today are in fact “proxies” for prohibited rating factors,” said Deirdre Cummings, legislative Director for MASSPIRG. “If the regulations prohibit the use of certain facts – then they, or proxies for those factors, should not be allowed. Premiums should be based primarily on your driving record. ”
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