OFF THE WIRE
I wrote the AG's office yesterday to inquire as to the meaning of some of the bullet items.... we've seen carriers dropping customers for no apparent reason, with an explanation that their system calculates they'll be a bad risk in the future, even though they had no losses; and we've seen some carriers giving over 65 discounts to drivers younger than that, in an attempt to boost their book of business.
http://www.mass.gov/?pageID=cagopressrelease&L=1&L0=Home&sid=Cago&b=pressrelease&f=2010_05_27_auto_reg_hearings&csid=Cago
AG Coakley Proposes New Consumer Protections for Auto Insurance Marketplace
New Changes Will Ensure Greater Transparency, Enhance Policy Holders’ Ability To Shop Effectively, And Prevent Deceptive Practices By Insurance Companies Against Consumers
BOSTON – Working to ensure that consumers receive greater protections within the new managed competition auto insurance marketplace, Attorney General Martha Coakley has proposed comprehensive new regulations.
The new consumer protection regulations, filed by her office with the Secretary of State’s Office, would increase the level of transparency, enhance policy holders’ ability to shop effectively for policies, and better prevent deceptive practices by insurances companies against consumers. The office will hold a series of public hearings on these proposals in June. The proposed regulations are available on the Attorney General’s website.
“We have seen some positive changes since the auto insurance marketplace was de-regulated two years ago,” AG Coakley said. “However, there are still many improvements that should be made within this system to better protect consumers. The consumer protections we are proposing today will enhance competition in the auto insurance market, improve consumers’ ability to shop effectively for premiums, better prevent deceptive practices by insurers, and ensure greater transparency and fairness for all.”
The proposed new regulations are promulgated under the Consumer Protection Act (Massachusetts General Laws Chapter 93A) and address certain unfair and deceptive practices that have been observed in the auto insurance industry by the AG’s Office and other consumer advocates. In December, the Attorney General’s Office released a detailed report which described several concerns about practices in the current marketplace and identified potential remedies. The major problems outlined by the report were barriers in the marketplace that hindered consumers from shopping effectively, increased ratings based on non-driving factors, and decreased transparency in rating and insurer practices.
The proposed protections prohibit certain unfair and deceptive conduct in the sale of auto insurance. Specifically, the regulations:
Protect consumers from insurance companies that use discriminatory factors or proxies for illegal factors in rating or underwriting auto insurance
There's been a lot of hullaballoo about this line item. Some carriers were using people's credit score to determine whether or not to accept a risk, rather than using the driver information. Another carrier was allegedly giving everybody over 25 an over 65 age discount (25%) in order to get business on the books. So I believe this is what this line item refers to.
Require insurance rating practices to be fair and transparent
This is obvious... and possible California could take notice of this!! They certainly would benefit from a measure like this, as I'm sure would other states!
Prevent insurers from issuing misleading advertisements
This appears to be directed towards those national carriers who advertise like crazy on TV and radio, making it sound like a consumer can "name their price", several carriers actually come out and claim they can save more money that a specific carrier, etc. (In one instance a lawsuit was actually brought by Arbella against Progressive for using the company as a comparison. The carrier found that the figures Progressive was using in their commercial were not correct, and they had no idea how they even arrived at the rate! Progressive changed its advertising immediately, and used other carriers rates. There seems to be questions as to whether or not the figures used represent actual rates or are just made up figures.
Ensure that consumers are made aware of discounts they may be entitled to in their auto insurance
It appears there were abuses of this. Apparently agents were not forthcoming to consumers about all the discounts that were available.
Protect consumers from policy cancellation or non-renewing policies without proper notice and justification
Carriers now have the "option" to non-renew a policy for "no apparent reason; and they also were not sending out notices to consumers of the non-renewal. This addresses that. I've seen carriers non renew somebody that's made no changes on their policy in the past year, had no new claims, is a good driver, and what we are told is.... the computer uses "factors" to determine whether or not a risk is one we want to stay on! I've had 3 people who were good drivers be non-renewed; and when I called in inquire, I was given the excuse about the factors "the computer uses". I'm hoping this line item will change that practice.
Protect consumers from unfair interest rates on installment plans
We've seen all kinds of things on this line item, from carriers charging $7.00 for someone calling in a payment, to outrageous finance charges assessed to bad drivers. It appears this line item addresses that.
Require companies to properly report at-fault accident reversals
There's now accident forgiveness being offered by a lot of carriers; however, it appears there's a problem with communications with the MassDOT when a carrier reverses the charge on a policy. Now all reversals need to be made known to the MassDOT....so that's being addressed now.
Protect consumers by preventing insurance agents from steering consumers to certain insurers based on commissions
There recently was a case here where an Life agent was charged with steering life policies to one particular carrier, because they offered him the best commission. The rates, however, were not the best for the consumer. This is what prompted this line item I bet!
Protect consumers by requiring insurers to promptly reply after a claim is filed
With the transition to competitive rating an insurance "POOL" was established for bad drivers; with the pool assigning customers to a company. What's been happening is... those carriers, because it's an assigned risk policy, seem to drag their feet on claims and put consumers off! At least that's my experience, so this line item addresses that.
"The Attorney General is stepping in and providing much needed consumer protections to Massachusetts drivers. These protections require insurers to focus on how we drive, instead of on who we are, and lift the existing veil of secrecy that prevents consumers from identifying unfair pricing and underwriting practices by insurers," said Deirdre Cummings, Legislative Director for MASSPIRG.
The Attorney General’s Office will hold two public hearings on the proposed regulations in June:
Boston
Wednesday, June 23, 2010, 2:00 p.m.
100 Cambridge Street, 2nd Floor, Conference Room A
Boston, MA
Springfield
Thursday, June 24, 2010, 2:00 p.m.
Office of the Attorney General
1350 Main Street, 4th Floor Conference Room
Springfield, MA
Interested parties may submit testimony either in person at one of the hearings or in writing. Written testimony may be submitted via mail, email, or fax:
By Mail or Hand Delivery
Office of the Attorney General
Cassandra Roeder
Insurance and Financial Services Division
One Ashburton Place
Boston, MA 02108
By e-mail: Cassandra.Roeder@ago.state.ma.us
By Facsimile: (617) 727-0184
The Attorney General will be accepting written comments until August 6, 2010. After this date, the Attorney General’s Office will have the opportunity to make any appropriate revisions to the proposed regulations before determinations regarding promulgation.
The Attorney General represents the public interest in administrative rate reviews of insurance company rate filings, brings actions in Superior Court against insurers that commit unfair or deceptive acts or practices, and is authorized under the state Consumer Protection Act to write regulations governing the conduct of insurance companies in the auto insurance marketplace. In addition, the Attorney General has been working to explore ways to improve consumer choice in auto insurance by a variety of initiatives and an increased public awareness campaign regarding auto insurance choices. Finally, the Attorney General’s Office provides mediation services to assist consumers in disputes with auto insurers, and has assisted more than 250 Massachusetts drivers with such disputes in the last year.
