Massachusetts AG Pushes Bills to Reform Auto Insurance Surcharges

State Attorney General Martha Coakley pushed legislators this week to change laws governing consumer surcharges that she said Massachusetts auto insurers have not properly refunded on repeated occasions.

In a Monday release, Coakley said state lawmakers should support several pieces of legislation that are currently under consideration, so that they could “prevent consumers from paying unwarranted costs.”

At issue are surcharges that auto insurers bring against consumers. Under the current process, according to the release, auto insurance carriers “are allowed to impose surcharges” on a driver that they initially find to be at fault for a crash, even while that driver is appealing his or her case with the state Board of Appeal.

Car insurers are required by law to refund surcharges if the state Board of Appeal rules in favor of the consumer. The problem, Coakley said, is that coverage providers are falling short.

An investigation by Coakley’s office into one of the state’s biggest car insurance companies, Metropolitan Property & Casualty (Met P&C), ended early this year with a settlement, but touched off a wider investigation that ultimately found that several other carriers failed to appropriately refund consumers.

In a letter she sent last week to the state Joint Committee on Financial Services, Coakley called the current system “problematic.”

“[It] is set up in a way that presumes consumers are responsible until proven otherwise,” she said in the letter.

The attorney general’s office will determine “the exact extent of overcharges” through ongoing audits, though Coakley said in the letter that total overcharges to consumers will be at least $1 million.

Coakley Wants ‘Favorable’ Recommendations, Treatment for Bills

According to Coakley, HB 919 and HB 848 “provide additional consumer protections to ensure that drivers who are wrongfully determined to be at fault for auto accidents are not required to pay additional premiums.”

According to the text of HB 919, the bill would “stay any surcharges until there has been a final appeal hearing.” Coakley said the piece of legislation would “make sense for all involved parties” and simplify a process that she said her office’s investigations found was a “time-consuming and onerous process” for insurers.

HB 848 requires insurers to refund “the amount overcharged” with interest to a consumer if that consumer wins an “at-fault determination” in a hearing with the state Board of Appeal.

Coakley said her office supports both HB 919 and HB 848, though she said passage of the former bill should be prioritized.

“Under [HB 919] it may be possible to avoid reimbursements all together,” she said in the letter.

The joint committee considered both bills in a September meeting.

Coakley also said her office supports SB 438, a piece of legislation that would, among other measures related to transparency, require car insurers to list each crash and offense on a policyholder’s driving record and the premium charges linked to each of them.

The bill would address complaint cases from consumers, Coakley said, in which her office has found auto insurers have “wrongly surcharged, and in some cases, surcharged [a consumer] twice for the same accident.”

“Affording consumers the opportunity to review the driving incidents for which they are being charged is critically important both as a matter of basic fairness and as a means to prevent overcharges,” Coakley said.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

No comments yet.

Comment on this article