Insurance Reform News

BOSTON—Consumer advocates urged the Joint Committee on Financial Services to support An Act to Reduce Auto Insurance Costs and Premiums in the Commonwealth SB 656, filed by Senator Tucker (Andover), which would lower auto insurance premiums for all drivers.

While insurers and many elected officials are debating the merits of deregulating our auto insurance ratesetting process, two consumer groups, the Center for Insurance Research and MASSPIRG, are urging lawmakers to focus first on consumers’ number one complaint – high rates.

“The blame for our high rates belongs to Massachusetts’s ultra-high accident rate. 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,” testified Deirdre Cummings, MASSPIRG’s Consumer Program Director. “Even improving our worst-in-the-nation accident rate to second worst could drop our premiums by nearly 30%, or about $300 on average per car per year, producing over $1 billion in statewide savings each year.”

“The main factor driving our insurance premiums is our accident rate,” added Steve D’Amato, Executive Director of the Center for Insurance Research. “Premiums correlate directly to the accident rate. Therefore the most effective way to reduce Massachusetts automobile insurance premiums is to focus on reducing the underlying costs of our system, especially the state's alarmingly high rate of accidents.”

An Act to Reduce Auto Insurance Costs and Premiums in the Commonwealth SB 656, filed by Senator Susan Tucker (Andover) and cosponsored by a bi-partisan group of 17 legislators, establishes a special commission to investigate and study the impact and effects of automobile accidents in Massachusetts on automobile insurance premiums. In addition, the act requires the commission to develop a comprehensive plan to lower the state's accident rate within 180 days of passage. The commission’s investigation, study and report shall include, but shall not be limited to, a review of the following potential reforms:

● Identifying and redesigning the most dangerous intersections in the state;
● Adopting a primary seatbelt law;
● Informing drivers clearly and regularly about the full cost of at-fault accidents, speeding tickets, and other traffic violations on individual automobile insurance rates;
● Improving enforcement of traffic violations in conjunction with a review of existing traffic restrictions to ensure that they are appropriate, reasonable, and not unnecessarily restrictive such that they dilute the weight of their public safety purpose;
● Discounts for safer vehicles;
● Discounts for individuals who participate in driver education programs;
● Initiatives to combat drunk-driving;
● Discounts for consumers who agree to use their own health insurance in case of
accident-related injuries;
● Improving traffic lane markings, traffic lights and signals, and road/street signs;
● Prohibiting the use of wireless phones while driving;
● Making it easier for consumers to switch auto insurers;
● Disclosing and making accessible better and more information about discounts that companies are offering; and
● Eliminating incentives to engage in fraudulent activities, revising existing penalties for committing fraud, and increasing enforcement aimed at eliminating fraud;

Other Legislative Sponsors include:
Senator Susan Tucker, Chief Sponsor
Senator Stephen Brewer
Senator John Hart
Senator Patricia Jehlen
Senator Michael Knapik
Senator Mark Montigny
Senator Bruce Tarr
Senator Richard Tisei
Senator Dianne Wilkerson
Representative Ruth Balser
Representative Barry Finegold
Representative Stephen Kulik
Representative William Lantigua
Representative Barbara L’Italien
Representative John Scibak
Representative Joyce Spiliotis
Representative Ellen Story
Representative Kathleen Teahan

“There is much debate today on plans to reorganize and deregulate our auto insurance system. None of the plans being debated, however, would have such a significant effect on lowering premiums as the adoption of a plan to drop our accident rate to just second worst –in –the nation,” concluded Cummings.