Insurance Reform News

Two of the states leading consumer advocacy organizations, the Center for Insurance Research and MASSPIRG, are calling on Julianne Bowler, the Commissioner of Insurance, to invoke her authority and require the insurance companies to pull the plug on a new add campaign full of false and misleading statements.

An insurance industry group, the Massachusetts Insurance Federation, Inc., has just launched an extensive series of television and radio advertisements that are untrue, deceptive, and misleading. These advertisements direct the audience to visit an insurance industry front-group’s website at www.fairnessforgooddrivers.com, which contains similar untruthful claims.

For example, one television advertisement states:

There are all kinds of drivers – good, bad, and ugly. But unfair laws in Massachusetts make everyone pay the same rate for auto insurance. No choice. So we pay 21% higher rates than average. Honk the horn for reform. (Sound of horn honking) Visit fairnessforgooddrivers.com.

“The television advertisement and the lobbying letter are untrue, deceptive, and misleading because everyone does not pay the same auto insurance rate in Massachusetts,” said Steve D’Amato, Executive Director of the Center for Insurance Research. “On the contrary, different drivers pay different rates under the current Massachusetts insurance regulatory system, based on a number of rating factors, including SDIP driver step (which ranks drivers based on their driving history of accidents and traffic citations).”

“The obvious intent of the industry’s misleading publicity efforts is to convince the public that the current system unfairly rewards bad drivers by charging them the same amount as good drivers, said Deirdre Cummings, MASSPIRG’s Consumer Program Director. “This falsehood is then used to try to convince consumers to support changes that would eliminate many of the consumer protections of the existing system.”

The groups urged Commissioner Bowler to seek immediate action under the insurance laws, including Section 3 of Chapter 176D of the General Laws, to force the insurance industry to withdraw its ads and to pursue fines and/or license revocations for all of the individual insurers indirectly responsible for these publicity efforts.

Attachment: (copy of letter sent to Commissioner)

September 26, 2005

Commissioner Julianne M. Bowler
Division of Insurance
One South Station
Boston, MA 02110-2208

Dear Commissioner Bowler,

MASSPIRG is joining the Center for Insurance Research in calling on you to use your authority as Commissioner, to halt a series of false and deceptive TV ads paid for by a group of auto insurance companies.

An insurance industry group, the Massachusetts Insurance Federation, Inc., has just launched an extensive series of television and radio advertisements that are untrue, deceptive, and misleading. These advertisements direct the audience to visit an insurance industry front-group’s website at www.fairnessforgooddrivers.com, which contains similar untruthful claims.

For example, one television advertisement states:

There are all kinds of drivers – good, bad, and ugly. But unfair laws in Massachusetts make everyone pay the same rate for auto insurance. No choice. So we pay 21% higher rates than average. Honk the horn for reform. (Sound of horn honking) Visit fairnessforgooddrivers.com.

In addition, the website referred to in the advertisement contains an “Action Alert” urging consumers to send the following letter to their legislators:

Let Your Voice Be Heard! The fact is good drivers should not be paying for bad drivers. Today in Massachusetts that is exactly what is happening. The Massachusetts Insurance Commissioner sets one rate for all the auto insurance companies and they must charge all their customers that same rate. Bad drivers pay too little under the current system, and good drivers pay too much.

That’s not fair. And that’s why we need your help.
Please join us in making auto insurance rates fair for good drivers across Massachusetts. Massachusetts drivers want change in the way auto rates are set and a choice in their insurance company.

Write your state senator and representative TODAY and ask them to support legislation that brings fairness in auto insurance rates to good drivers in the state. It’s the right thing to do.

The television advertisement and the lobbying letter are untrue, deceptive, and misleading because everyone does not pay the same auto insurance rate in Massachusetts. On the contrary, different drivers pay different rates under the current Massachusetts insurance regulatory system, based on a number of rating factors, including SDIP driver step (which ranks drivers based on their driving history of accidents and traffic citations). The obvious intent of the industry’s misleading publicity efforts is to convince the public that the current system unfairly rewards bad drivers by charging them the same amount as good drivers. This falsehood is then used to try to convince consumers to support changes that would eliminate many of the consumer protections of the existing system.

We urge you to seek immediate action under the insurance laws, including Section 3 of Chapter 176D of the General Laws, to force the insurance industry to withdraw its untrue, misleading, and deceptive publicity efforts, which distort the public discourse on an issue important to millions of Massachusetts consumers. Furthermore, the Division of Insurance should pursue fines and/or license revocations for all of the individual insurers indirectly responsible for these publicity efforts.

Please contact us for any further information or assistance at (617) 292-4800.

Sincerely,

Deirdre Cummings
MASSPIRG Consumer Program Director