Insurance Commissioner Nonnie S. Burnes yesterday approved the 2008 rate filings of eight insurance companies, including one that Attorney General Martha Coakley is challenging because Coakley says it includes millions of dollars in customer overcharges.
Burnes approved the rates of Safety Insurance, Amica Insurance, Quincy Mutual Insurance, OneBeacon Insurance, and four smaller companies, Fireman's Fund, Farm Family, Praetorian, and State Farm Mutual Insurance.
Coakley has challenged the rate filing of Safety, saying the company inflated its expense and loss trends and padded its profits. Coakley has said the filings of Safety, Commerce, and Arbella Mutual Insurance would result in over charges to customers totaling more than $100 million.
Burnes reached the opposite conclusion on Safety. She said its filing didn't contain excessive losses, expenses, or profits. She agreed to hold a hearing on Coakley's challenge to Safety's filing on Jan. 11, but her approval of Safety's rates and her comments at a regulatory hearing yesterday indicate a change is unlikely.
The insurance commissioner and attorney general may be headed for a confrontation.
Coakley, in a series of bulletins to the industry, has suggested that rates would have dropped significantly more in 2008 if regulators had continued to set them, as they have for the past 30 years. She has said many of the company filings don't comply with past decisions of insurance commissioners.
Burnes, who is trying to usher in an auto insurance system in which companies set their own rates subject to her approval, suggested several times yesterday that Coakley's analysis was off base. She referred to Coakley's "so-called bulletins" and suggested many of the attorney general's concerns about what prior commissioners approved were irrelevant to the current proceedings.
"There's one insurance regulator in the Commonwealth, and that's the commissioner of insurance," Burnes said.
Burnes indicated her standard for reviewing filings is much narrower than the attorney general's. She said she hired an actuarial firm to develop an indicated rate for each company based on the firm's projected losses, expenses, and profits. She said the actual rates filed by the eight companies whose rates were approved were all lower than the indicated rates developed by her actuarial firm.
The indicated average rate for Safety, for example, was a 6 percent reduction. The company's rate plan sought a 6.3 percent average reduction. Amica's indicated average rate was a 4.9 percent reduction, but the company filed for a 7.9 percent average reduction.
The tension between the commissioner and the attorney general surfaced during a meeting to discuss legal housekeeping issues prior to a Jan. 9 hearing on the rate filing of Commerce, which insures a third of the vehicles in Massachusetts. Both officials have raised concerns about Commerce's filing.
Commerce yesterday said it shouldn't be required to provide additional documents to Coakley, who is challenging the company's 6 percent average rate reduction. Burnes seemed sympathetic to the request and asked Assistant Attorney General Peter Leight why she shouldn't grant it.
Leight said he wanted to verify the numbers in Commerce's filing. He said the attorney general would subpoena the documents if Burnes denied the request. Burnes didn't make a decision on the document request, giving Commerce and the attorney general until today to submit written arguments.
Commerce's decision to defend its rates could be costly. If it loses and its rate plan is rejected, the company would only be able to offer its 2007 rates starting April 1, said a spokeswoman for the Division of Insurance, which could put it at a competitive disadvantage since every other company is lowering rates below 2007 levels. Commerce in mid-February could file new rates for policies renewing in May, the spokeswoman said.
The insurance commissioner yesterday also scheduled hearings on Coakley's challenges to the rate filings of Premier Insurance (Jan. 14), Hanover Insurance (Jan. 16), and Arbella (Jan. 18).
Bruce Mohl can be reached at mohl@globe.com.
