On May 27, 2010, Attorney General Martha Coakley proposed comprehensive new regulations that could potentially have far reaching consequences for the Massachusetts Automobile insurance marketplace and those agents who represent it. The proposed regulations fall under 940 CMR 28.00: Automobile Insurance Regulations and can also be found on the Massachusetts Office of the Attorney General’s website here.
The proposed regulations are promulgated under the Consumer Protection Act, known as Massachusetts General Laws Chapter 93A. The proposed regulations set forth practices that will be considered to be violations of the Consumer Protection Act, M.G.L. c.93A. Proven violations result in judgments of double or triple damages and attorney’s fees. As such, insurance agents and brokers will be wise to review their practices and procedures to avoid unwittingly violating these regulations which may result in severe economic consequences.
How Some of The AG’s Proposed Regulations Would Impact Massachusetts Auto Agents
- Auto Insurance Quotes
Except in certain circumstances, producers will be required to provide quotes from all insurers with which the producer has a contract when a consumers seeks a quotes or is shopping for insurance, a customers is purchasing a policy, or a customer is renewing a policy. Quotes will not be required if the producer only has instituted certain practices and policies. For example, as to renewals, quotes will not be required if the consumer has been informed that the producer will not be seeking market choices for the consumer and the consumer has not asked for a change in this practice.
- MAIP Applications
A producer may not apply to MAIP on behalf of a consumer without providing a written disclosure to the consumer that the producer is making such an application. Furthermore, a producer will be required to disclose to the consumer that the consumer has the right to obtain insurance rate quotes from other voluntary carriers before entering the MAIP.
- Steering Business, Inaccurate Applications, Marketing Practices
Steering business to any insurer in whole or in part based on the level or remuneration paid or offered from that insurer or knowingly providing inaccurate information on a insurance application and certain marketing practices will also be considered violations under Chapter 93A under the proposed regulations. In particular, there are new restrictions on the use of advertising words such as “low” or ‘lowest’ and “savings.”
Other areas of interest to Massachusetts agents include proposed changes to Installment Contracts, the Use of Tiers in the Offer or Sale of Insurance and Discounts among others.
In December 2009, the AG’s office presented a report describing several concerns about common practices in the Massachusetts residual automobile marketplace. Problems highlighted in the report included barriers in the marketplace that hindered a consumer’s ability to effectively shop for insurance, increased ratings based on non-driving factors and decreased transparency in rating and insurer practices. As Attorney General Coakley stated in the press release:
We have seen some positive changes since the auto insurance marketplace was de-regulated two years ago. However, there are still many improvemets that should be made within this system to better protect consumers. The consumer protections we are proposing today will enhance competition in the auto insurance market, improve consumers’ ability to shop effectively for premiums, better prevent deceptive practices by insurers, and ensure greater transparency and fairness for all.
How to Make Your Voice Heard
The Attorney General’s Office posted a notice of hearing on its website. A meeting was held on the proposed regulations in 940 C.M.R. 28.00 in Boston on June 23, 2010 and another is happening today at 2:00 p.m. in Springfield, MA at 1350 Main Street, 4th Floor Conference Room. Interested parties may submit testimony either in person at one of the hearings or in writing. Written testimony will be accepted until August 6, 2010 and can be sent via mail. Correspondence should be addressed to the following:
Office of the Attorney General
Attn: Cassandra Roeder
Insurance and Financial Services Division
One Ashburton Place
Boston, MA 02108
Or By Facsimile at 617.727.0184
Or Email Ms. Roeder at Cassandra.Roeder@state.ma.us
For More Information on the Proposed Regulations, you can also view the Attorney General’s May 27, 2010 Press Release here.
If you have any questions or concerns on how this statute may affect your Massachusetts insurance agency or would like to discuss any other potential legal issues please contact our attorney Kara Larzelere here.