A series of proposed new regulations in Massachusetts, calling for greater consumer protections in the auto insurance marketplace, are both ‘unnecessary and ill-advised,” according to an industry group.
Martha Coakley
Massachusetts Attorney General Martha Coakley recently announced that her office has filed new consumer protection regulations with the Massachusetts Secretary of State’s Office. The goal, according to a statement from Coakley’s office, is to “increase the level of transparency, enhance policy holders’ ability to shop effectively for policies, and better prevent deceptive practices by insurances companies against consumers.”
Among the proposed regulations are rules to require insurance rating practices be fair and transparent; protect consumers from insurers using discriminatory factors or proxies for illegal factors in rating or underwriting; force companies to properly report at-fault accident reversals; and make insurers to promptly reply after a claim is filed.
“We have seen some positive changes since the auto insurance marketplace was de-regulated two years ago,” 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.”
Coakley’s office pointed to a December 2009 report it released, describing several concerns about practices in the current marketplace and potential remedies. The major problems in the report, her office said, were barriers in the marketplace hindering consumers from, “shopping effectively, increased ratings based on non-driving factors, and decreased transparency in rating and insurer practices.”
NAMIC says ‘no need’ for new rules
The attorney general’s office is planning a pair of public hearings later this month on the matter, but the National Association of Mutual Insurance Companies (NAMIC) thinks both the regulations and the basis for them are unjustified.
“The sweeping set of new regulations put forward by Attorney General Martha Coakley are unnecessary and ill-advised, to say the least,” said Paul Tetrault, NAMIC’s Northeast state affairs manager, in a statement.
Tetrault said the underlying premises of the regulations and the report indicate that consumers “are not faring well under managed competition” and lack adequate protection, he said.
“Nothing could be further from the truth: the increased competition has resulted in most consumers saving money and having meaningful choices in the marketplace for the first time in decades,” Tetrault said. “Both anecdotal evidence and quantitative polling have shown the move to managed competition to be extremely popular among Massachusetts drivers. And consumers are well protected by existing laws and regulations; the Massachusetts Division of Insurance has done a commendable job of overseeing a smooth transition to managed competition.”
He added that Massachusetts already has strong statutes and regulations providing consumer protection, therefore, “there is simply no need for additional regulations.
“Attorney General Coakley has been a critic of the move to managed competition since it was first put forward by the Division of Insurance,” he said. “It would be legitimate to consider whether these new regulations are being proposed for no other reason than to bolster the [attorney general’s] role in the oversight of insurance. If so, consumers may be caught in the crossfire of a battle over bureaucratic jurisdiction.”
Auto market reform in Mass. ‘unnecessary and ill-advised,’ group says via IFAwebnews .