MASSPIRG
and the Center for Insurance Research, two leading insurance groups,
strongly oppose the decision announced today by the Division of
Insurance to adopt an “assigned risk plan.” The assigned risk plan will
allow insurers to reject drivers – even those with perfect driving
records – based on non-driving factors such as credit scores, income,
education, and home ownership.
The best estimate is that over a million drivers, including hundreds of
thousands of drivers with clean driving records, will be rejected under
the plan. Rejected drivers will be randomly assigned to another
insurer. As a result, drivers will lose the freedom to choose their
insurer, will be subject to discriminatory underwriting practices, and,
in many instances, will face higher insurance costs.
The assigned risk plan will have many negative impacts on consumers. Specifically, it will:
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Allow insurers to reject drivers based on stereotypes. The new plan
will allow insurance companies to use personal information – such as a
driver’s credit score, income, education, and home ownership status
(i.e., whether the driver doesn’t own a home) – to reject drivers.
-
Raise insurance premiums for many rejected drivers. Hundreds of
thousands of drivers forced into the plan could pay higher premiums as
a result of losing access to discounts (such as good driver discounts
and combined auto/homeowners insurance discounts) when assigned to an
insurer not offering the discounts.
- Limit choice. Rejected consumers will no longer have the right to choose their insurer.
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Fail to address the #1 Consumer Complaint – high premiums. While the
new plan clearly addresses the complaints of some auto insurance
companies, it will not address drivers’ complaints of high premiums.
The assigned risk plan does nothing to correct the main cause of our
high premiums – our highest-in-the-nation accident rate. The only road
to lower premiums is through cost reduction. If we pursued a
comprehensive cost‑containment effort that improved our
worst‑in‑the‑nation accident rate to just second worst and attacked
fraud as we did in the city of Lawrence, we could cut auto insurance
premiums by approximately 30%, or about $300 on average per car per
year. Without dealing with the underlying costs, we will not see any
overall decline in premiums, but rather a shifting of premium dollars –
some people would pay more and others pay less, based on factors that
make no sense to the average driver.
Lastly, any reform affecting over one million drivers should not be
adopted at this time, by an administration with less than 3 weeks left
in office.
