eNewsAutoCar.com

BOSTON - Attorney General Martha Coakley’s Office announced this morning that it will trigger rate hearings on three insurers: Commerce Insurance Company, Premier Insurance Company, and Safety Insurance Company. Today was the deadline for the Attorney General’s Office to call for rate hearings on the first round of insurer filings under the new managed competition system. Together, these three insurers provide coverage for more than 1.5 million Massachusetts drivers, representing over 45% of the market. All three insurers filed for only a 6% rate decrease. Collectively, these insurers’ rate filings seek to overcharge Massachusetts drivers by over $100,000,000. The Attorney General’s Office also issued a third bulletin to the industry today announcing that it would be triggering rate filings against these companies and that two others warranted further administrative review by the Commissioner of Insurance.

“Increased competition has the potential to bring down rates and serve consumers’ interests,” said Attorney General Coakley. “However, under the managed competition reform, rates are still subject to regulation and approval, and the law prohibits excessive rates. Particularly during this transition to a more competitive market, these insurers’ complex filings demand close scrutiny.”

Today, the Attorney General’s Office also announced that it would not be calling for rate hearings with respect to Fireman’s Fund and State Farm, which together comprise only 1% of the Massachusetts market. Although some troubling aspects were identified in these filings, the Attorney General’s Office decided to call for hearings only on the filings with the most widespread consumer impact and the most serious defects, and not on these two carriers.

In announcing it would not be calling hearings against Fireman’s Fund and State Farm, the Attorney General’s Office noted questionable provisions that warranted the Commissioner’s attention. Specifically, the Attorney General’s Office noted that the filings calculated excess profits, used unorthodox methods to project losses and the expenses in the filing are excessively higher than average companies in the market. In a letter to the Commissioner of Insurance, the Attorney General noted that the Commissioner has until April 1, 2008 to review the filings, and urged her to look more closely at the suspect provisions of these tiny market share insurers.

The Attorney General’s Office has until December 17th to make final decisions regarding the remaining insurer filings. Further information on the managed competition system can be found by reviewing the Attorney General’s two earlier bulletins posted on the AGO website http://www.mass.gov/ago.

Until this year, auto insurers had their rates fixed and established by the Commissioner of Insurance. This year, the Commissioner of Insurance, for the first time in 30 years, created the new “managed competition” system. Under the new system, insurers file individual rates with the Commissioner of Insurance, which become effective unless the Commissioner disapproves them. The Attorney General retains the statutory right to trigger rate hearings on individual insurer rate filings when needed to protect the interest of consumers.

Auto Insurance Rate Cases are handled by Attorney General Martha Coakley’s Insurance and Financial Services Division.