Put brakes on deregulated auto insurance, senators say
Insurance Commissioner Nonnie S. Burnes has promised to keep a tight regulatory rein on automobile insurers as competition is introduced next year, but several state senators said yesterday they weren't content to rely on the commissioner's assurances.
Senator Marc R. Pacheco, Democrat of Taunton, testifying before a group of state senators holding hearings on auto insurance competition, said he didn't want to rely on Burnes's "trust me" message.
"Let's put it in the law," said Pacheco, who also suggested it may be time to make the state's insurance commissioner an elected position to promote greater consumer accountability.
Pacheco and other senators are concerned that insurers will be allowed to set drivers' premiums based in part on such socioeconomic factors as their credit histories, whether they own a home, their educational level, and occupation. The senators say the use of those factors results in discrimination against low-income drivers.
The senators said they intend to push for legislation that would allow insurers to set premiums based only on driving records, the number and severity of at-fault accidents, traffic violations, mileage driven, and years as a licensed driver.
Burnes's spokeswoman, Kimberly Haberlin, said the commissioner "has repeatedly expressed deep skepticism about the use of socioeconomic factors and pledged to proceed with great caution when it comes to determining what factors companies can use in underwriting and rating."
Burnes is expected to release draft regulations for a move to competition soon, possibly as early as today.
Susan Scott, senior vice president and general counsel at Premier Insurance Co. in Worcester, testified that it would stifle pricing innovation in Massachusetts if companies were barred from using any factors other than those cited by Pacheco.
For example, Scott said, Premier's par ent company, Travelers Indemnity Co., offers discounts in other states to hybrid vehicle owners. Scott said the hybrid discount would not be permitted in Massachusetts under the Pacheco limitations.
Stephen D'Amato, a consultant to the Center for Insurance Research in Cambridge, said Burnes's decision to declare a move to competition April 1 indicated she would allow companies to use socioeconomic factors in deciding whom to insure.
D'Amato said Burnes's decision carries huge ramifications for as many as 1 million drivers who are likely to be turned down for coverage by the state's insurance companies and randomly assigned to a carrier. "You're headed for open season on low-income drivers," D'Amato said of the commissioner's so-called assigned-risk plan.
William Cahill, vice president and group counsel at Hanover Insurance Co. in Worcester, said the assigned-risk plan is needed to eliminate inequities in the way drivers that no company wants to insure voluntarily are distributed among companies. He also said the system will help reduce fraud by making companies directly responsible for any losses associated with drivers assigned to them. Currently, the losses of those drivers are pooled and split among the companies.
Senator Dianne Wilkerson, a Roxbury Democrat, said the wholesale changes being pushed by Burnes are likely to hurt the urban drivers, who are her constituents. "It is my intention to do everything in my power to stop it," Wilkerson said.
Bruce Mohl can be reached at mohl@globe.com. 
