Massachusetts Attorney General Martha Coakley is proposing new regulations that she says will rein in sales and underwriting practices for auto insurers and agents in the state.
The regulations come in response to a report issued by her office in December on the state of Massachusetts auto insurance market, which was largely deregulated in 2008.
“We have seen some positive changes since the auto insurance marketplace was deregulated two years ago,” Coakley said in a statement. “However, there are still many improvements that should be made within this system to better protect consumers,” she added.
Coakley says the moves will boost transparency efforts, help consumers to better shop for policies and halt deceptive advertising by insurance companies in the state. Coakley’s office will hold two public hearings this month on the regulations.
Among the recommendations sought by Coakley are specific regulations to ban the use of credit scores to determine premiums and codify rules for statements that insurers make when they advertise their prices.
The proposal is being met with skepticism from many in the insurance industry.
Paul Tetrault, Northeast state affairs manager for the National Association of Mutual Insurance companies called the regulations “unnecessary and ill-advised, to say the least.
“The underlying premises of the regulations, and the report issued by Attorney General Coakley’s office, are that consumers are not faring well under managed competition and that consumers are not protected adequately under existing regulations. Nothing could be further from the truth: the increased competition has resulted in most consumers saving money and having meaningful choices in the marketplace for the first time in decades,” Tetrault added.
Frank Mancini, president and CEO of the Massachusetts Association of Insurance Agents, said that one of the new regulations in particular – a requirement that agents quote an insured with every single carrier they represent – might cause a lot of headaches for agents in the state.
“That is just impractical,” he said. “One would need literally hours just to complete an application.The people who wrote these regulations clearly aren’t on the front lines of an agency giving people quotes.”