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Several Mass. Auto Insurers under Pressure to Amend Rates for 2008

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At least three insurers whose 2008 Massachusetts auto insurance rates have been questioned by officials have agreed to revise them and other insurers are under pressure to do the same.

Massachusetts Insurance Commissioner Nonnie Burnes last Friday raised concerns with filings by four insurers: Commerce Insurance Co., Liberty Mutual, Electric Insurance Co. and Arbella Mutual. She said the filings erred in partly basing premiums on how much bodily injury coverage a customer buys.

Burnes told the carriers that giving premium breaks to insureds because they have higher bodily injury limits violates the state’s guidelines for its new managed competition system set to go into effect next April.

According to a department spokesperson, Liberty Mutual, Electric and Arbella Mutual have already indicated their willingness to fix their filings.

The response from Commerce is still being reviewed, according to the department.

Commerce is also being told to revise the way it handled its group discounts in its filing.

Meanwhile, Attorney General Martha Coakley said she also wants to probe the rate filings of Commerce along with those of Premier Insurance Co. and Safety Insurance Co. to see if their rates should be lower than filed.

Coakley charged that collectively these insurers’ that write about 45% of the market seek to “overcharge” Massachusetts drivers by more than $100 million.

According to the insurance department, the average statewide rate decrease for all 19 insurers is 7.8 percent, with Commerce at 8.1% and Premier and Safety both at 6.3%.

Coakley said her office would seek hearings into the rate filings of these three companies and suggested that the filings of two other insurers warranted further administrative review by Burnes.

Coakley said that the rate filings of Fireman’s Fund and State Farm, which together comprise only 1% of the Massachusetts market, contain “some troubling aspects” but that her office decided not to call for hearings on these insurers’ filings. She maintained that the filings calculated excess profits and used “unorthodox methods” to project losses and the expenses that are “excessively higher than average companies in the market.”

She urged Burnes look more closely at the “suspect provisions” of these small market share insurers.

“Increased competition has the potential to bring down rates and serve consumers’ interests,” said 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.”

The attorney general’s office has until December 17 to make final recommendations regarding the remaining insurer filings.

Following Coakley’s comments on Monday, Kimberly Haberlin, press secretary for the Office of Consumer Affairs and Business Regulation, issued a statement suggesting that the insurance department will work with Coakley’s office to review all the rates.

“The efforts of both the Commissioner and the Attorney General demonstrate that the strong consumer safeguards built into managed competition are working. We look forward to reviewing her concerns and continuing to work together to make the promise of lower rates for good drivers, more choices and better products a reality for consumers across Massachusetts,” Haberlin stated.


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