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
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 file size 1MB 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
- Require insurance rating practices to be fair and transparent
- Prevent insurers from issuing misleading advertisements
- Ensure that consumers are made aware of discounts they may be entitled to in their auto insurance
- Protect consumers from policy cancellation or non-renewing policies without proper notice and justification
- Protect consumers from unfair interest rates on installment plans
- Require companies to properly report at-fault accident reversals
- Protect consumers by preventing insurance agents from steering consumers to certain insurers based on commissions
- Protect consumers by requiring insurers to promptly reply after a claim is filed
"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:
Wednesday, June 23, 2010, 2:00 p.m.
100 Cambridge Street, 2 nd Floor, Conference Room A
Thursday, June 24, 2010, 2:00 p.m.
Office of the Attorney General
1350 Main Street, 4th Floor Conference Room
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
Insurance and Financial Services Division
One Ashburton Place
Boston, MA 02108
By e-mail: Cassandra.Roeder@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.