Coakley says don't abolish appeals board

AG contests insurance commissioner's decision

Calling an independent appeals board a crucial tool for drivers unfairly blamed by insurers for accidents, Attorney General Martha Coakley yesterday urged Insurance Commissioner Nonnie S. Burnes to preserve the board, scheduled to be phased out in April.

Burnes says insurance companies should review their own decisions regarding accident responsibility. Her plan to scrap the appeals board has previously been criticized by legislators and consumer advocates.

"Given the incentives insurance companies have to uphold their own determinations of fault, it is important for Massachusetts consumers to have a simple, accessible, independent third party of insurer 'at fault' determinations," Coakley wrote in a letter to Burnes.

The attorney general also disputed Burnes's contention that consumers will be protected because they can shop for another insurance company that won't assess the surcharges.

The "real impact that surcharge determinations have on consumers . . . cannot be erased by subsequent shopping for a new insurance carrier," Coakley said. "Removing an independent third-party review of surcharges is an anticonsumer policy that is not required by law and has no corresponding benefit to competition, policyholders, or the public."

Burnes did not immediately return a call seeking comment.

The board hears about 50,000 cases a year and overturns 50 percent of insurance company rulings. It costs $50 to file an appeal and can take six months for a case to be heard.

Bills to preserve the board have many sponsors in both the House and Senate. Given the likely passage, Coakley urged the commissioner to put off dismantling the board. To shut it down and then restart it would "create consumer confusion," she wrote. "It would be better to allow the Legislature time to resolve the issue, and in the interim keep the board's role in place."

She also disputed Burnes's contention that she didn't have the power to maintain the appeals board.

"In our view, you have ample regulatory authority to continue to require such review," Coakley wrote.

Last year, a "managed competition" auto insurance system replaced a longstanding arrangement in which the state oversaw insurance rates and the types of policies offered. The new process is designed to spur product innovation and competition among insurers, leading to lower prices and more choices.

But Burnes's plan has caused concern and anger among consumers and some agents, who claim their business will suffer because of the changes.

Last year, early in the transition to managed competition, Burnes and Coakley battled over maintaining consumer protection and oversight of insurance company policies.

Burnes has said she is developing additional regulations that would govern her proposed system of company reviews of accident findings. Such findings can lead to thousands of dollars in higher premiums. Surcharges resulting from an at-fault accident can last for six years.

Jeffrey Krasner can be reached at krasner@globe.com.