Proposed Auto Rules Need Consumer Protections

	VOICE FOR CONSUMERS—Legislative Director Deirdre Cummings testifies concerning the proposed auto insurance reforms. Throughout the proceedings, MASSPIRG advocates stood up for consumers and gave voice to their concerns about the regulations.

On Aug. 29, Insurance Commissioner Nonnie Burnes proposed a new set of auto insurance regulations for Massachusetts drivers. MASSPIRG’s Legislative Director Deirdre Cummings testified at a subsequent hearing to explain the regulation’s “potholes,” into which Massachusetts consumers might fall.

Commissioner Burnes proposed to ban some, but not all, discriminatory or unfair rating and underwriting factors, and failed to adopt other vital consumer protections in the regulations.

“While we are pleased that the commissioner has banned some unfair rating and underwriting factors, she has opened the door for the insurance industry to use a slew of other unfair factors that have nothing to do with a consumer’s driving record,” said Cummings.

Progress, And Drawbacks
Despite the commissioner’s stated reservations about the use of credit scores in insurance, her regulations do not prevent an insurer from using credit scores as a factor in determining whether to reject a driver for coverage altogether.

For the first time in over 30 years, insurance companies will be allowed to use discriminatory factors in selling auto insurance. While banning some of the most blatantly unfair provisions, the proposed regulations allow insurers to use many other factors that could harm low-income and minority drivers, including those that act as proxies for the very factors banned by the commissioner.

In order to protect against discrimination and to ensure that driving records are the primary factor insurers use in setting premiums and in underwriting, the commissioner needs to clarify all the rating and underwriting factors that may be used by insurers.

Furthermore, credit scores and information gathered from consumers’ credit reports have only been temporarily prohibited for rating purposes and have not been restricted at all for use in denying coverage altogether.

In advance of this proposal, 10 consumer groups (including MASSPIRG) urged the commissioner and the governor to ban the use of all socioeconomic rating and underwriting factors such as credit scores, which have nothing to do with an individual’s ability to drive and which correlate with a consumer’s income level and race.