The Massachusetts Attorney General’s Office held public hearings on June 23 and 24, 2010, to hear comments and concerns regarding the proposed auto insurance regulations that will impact insurance companies and insurance agencies throughout the Commonwealth. Frank Mancini, president and chief executive officer of MAIA and others spoke out against certain portions of the regulations as unfair, burdensome and impractical. MAIA, in particular, opposes Section 28.13. Under the proposed section, it would be unfair and deceptive for any producer to “fail to provide quotes from all insurers with which the producer has a contract when a consumer seeks a quote or is shopping for insurance, or purchasing or renewing a policy” except in a few limited circumstances such as when the producer informs the consumer that it will not provide quotes and the reasons why it will not. The way that the regulation is written, it appears that in order to comply, a producer will need to provide quotes to consumers that are purchasing or renewing policies even when a consumer has not asked for quotes.
Burdensome, Time Consuming and Impractical
As Mr. Mancini testified, “In order to properly quote an auto insurance premium, a producer not only has to have a consumer complete the auto insurance application, but also a company specific supplemental application. The proprietary nature of insurance company rating systems makes it more difficult for an agency to obtain numerous quotes for the same risk in a reasonable amount of time.” With some agencies representing over 20 companies, providing quotes for all companies would be “such a time-consuming endeavor that most consumers would not be satisfied with the waiting time involved.”
Dubious Consumer Value
Under managed competition, insurance company auto insurance products and rating procedures have become differentiated. For example, one company may provide accident-forgiveness in its rating and another may not. Thus, the consumer may not be comparing apples with apples and a quote does not definitely tell the consumer which product may be best for them or even, ultimately, the least expensive.
Further, the proposed regulation as currently written favors producers employed by insurance companies over independent insurance agencies. As those producers represent only one company, under the new law they would need only provide a single quote. Independent agents, however, representing various insurance agents will be constantly scrambling to provide consumers with quotes from up to twenty companies. As such, many think this law untenable.
How to Make Your Voice Heard
While the public hearings for the proposed regulations have concluded, the Attorney General’s Office will be accepting written comments concerning the proposed regulations until 5:00p.m., August 6, 2010. Comments can be sent via email to Cassandra.Roeder@state.ma.us, by facsimile at (617)727.0184 or by post to:The Office of the Attorney General Attn: Cassandra Roeder Insurance and Financial Services Division One Ashburton Place Boston, MA 02108
For More Information on the Attorney General’s Proposed Regulations
If you would like to read the proposed regulations yourself, they can be viewed on the Office of the Massachusetts Attorney General’s website 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.