State to keep car insurance appeal board

Commissioner alters stance before start of Beacon Hill hearing

Changing her earlier stance, Massachusetts Insurance Commissioner Nonnie S. Burnes said yesterday she will retain a state board that allows drivers to appeal auto insurance surcharges.

Burnes's decision was disclosed about an hour before a 2 p.m. hearing at which state lawmakers were scheduled to begin discussing legislation aimed at maintaining the board. There was overwhelming support for retaining the board in both the House and Senate, according to legislators who sponsored the bills.

Legislators had threatened action after Burnes decided to eliminate the board under the state's "managed competition" auto insurance system, which took effect last year. In a statement, Burnes defended her proposal to have drivers appeal surcharge decisions directly to the insurance companies that found them to blame for an accident.

"We had every confidence that this new plan would protect consumers and offer them a fair resolution; however, we have heard the concerns voiced by the general public," she said. "Responding to those concerns, today we are announcing that we are maintaining the Board of Appeals and its accident resolution review process."

Supporters of the board process said they were pleased that Burnes changed her mind.

"This is good news," said Frank Mancini, chief executive of the Massachusetts Association of Insurance Agents. "The consumer wins."

Until last year, the state largely set rates and tightly controlled the types of policies companies could sell. Under managed competition, auto insurers set their own rates and can choose whether to introduce new products. Burnes previously argued the new system didn't allow her to maintain the board of appeals beyond April 1.

Burnes had also said customers unhappy about being assessed a surcharge could take their business to an insurer that would "forgive" the penalty. But such accident forgiveness features typically only apply to customers who stay with their existing companies.

When drivers are involved in a colli sion, their insurance company determines if they were at fault for the accident. Those deemed at fault are considered more of a risk and must pay a surcharge on their premiums. Such surcharges can be as much as 50 percent of the premium, adding hundreds of dollars a year to the cost of insurance for up to six years.

According to consumer advocates, drivers were unlikely to receive a fair hearing from their insurers under Burnes's proposal since the companies would have a vested interest in receiving additional revenue. About half the 50,000 cases heard by the appeals board each year are decided in favor of motorists. It costs $50 to apply for a hearing and takes about six months for a case to be heard.

Despite the decision, yesterday's Beacon Hill hearing still went forward. Lawmakers said they might need to pass legislation to ensure the board's continued existence.

"We need to see if there's a push to keep the board as a permanent fixture, or to maintain the current system where it can be decided on the whim of the current or future commissioner," said state Senator Stephen J. Buoniconti, Democrat of Springfield, lead sponsor of the Senate's version of the bill to preserve the board. "Long-term, there may be a need for a statutory change."

Deirdre Cummings, legislative director of the Massachusetts Public Interest Research Group, said, "The Board of Appeals is an important safeguard to ensure that consumers are protected against decisions by insurance companies that can result in significantly higher premiums."

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