News Release

Two Insurers Undermine Massachusetts Auto Insurance Competition

Violate Division of Insurance Requirement by Rejecting Drivers
For Immediate Release

MASSPIRG and the Center for Insurance Research have discovered that at least two insurers – USAA and State Farm – are refusing to offer coverage to Massachusetts drivers, in violation of a Division of Insurance requirement.  The Division has stated on its website that a driver can only be refused coverage if he\she:

  • Has 10 or more surcharge points,
  • Is a newly licensed driver seeking his\her own policy, or
  • Has not had a Massachusetts automobile policy during the last 12 months

But as part of a review of insurer practices under “managed competition” by MASSPIRG and the Center for Insurance Research, the two consumer groups discovered that at least two insurers are rejecting experienced Massachusetts drivers with clean driving records. 

“This is not only unfair to consumers, who in many cases lose access to the lowest rates available in the competitive market, it is also unfair to those insurers that are playing by the rules,” said Deirdre Cummings, MASSPIRG’s Legislative Director.  “If these practices are permitted, the Division of Insurance will be undermining competition in two ways – by limiting consumer choice and by creating an unlevel playing field for the insurers.”

“Massachusetts has a reputation for allowing some insurers to game the system at the expense of other insurers,” said Stephen D’Amato of the Center for Insurance Research.  “Unless the Division of Insurance halts these unfair practices, it will be sending the message that insurers are not treated equally in Massachusetts, at a time when the Division is trying to attract new insurers to our auto insurance market.”

The specific language from the DOI Website:

 

The period between April 1, 2008 and March 31, 2009 is known as a “transition period.”  During this year, companies can refuse coverage for certain drivers. Those drivers will be assigned to an insurer through the MAIP.  During this time, a driver can only be refused coverage if he\she:

  • Has 10 or more surcharge points,
  • Is a newly licensed driver seeking his\her own policy, or
  • Has not had a Massachusetts automobile policy during the last 12 months

Starting on April 1, 2009, any driver can be assigned through the MAIP if he\she does not meet a company’s voluntary underwriting criteria.  The only exception to this rule applies to certain drivers referred to as “clean in three.”  You are a “clean in three” driver if all of the following criteria apply to you:

  • You have been licensed in Massachusetts for at least 3 years prior to the effective date of your policy
  • You have been continuously insured during that time
  • You had no traffic violations or at-fault accidents for 3 years prior to the effective date of your policy
  • You had no DUI or other vehicular felony convictions for 5 years prior to the effective date of your policy

If you meet this definition of a “clean in three” driver, you cannot be assigned to an insurer through the MAIP – except in limited circumstances – before April 1, 2011.

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