Mass. AGO To DOI: Time To Lower Commercial Auto Premiums Too

Argues Reduced Economic Activity and Reduced Road Congestion Should Lead to Lower Premiums

Similar to her call on the Division of Insurance in April, Attorney General Maura Healey is now requesting that the DOI take “immediate steps” to ensure that commercial insurance policyholders in Massachusetts receive a refund to their commercial auto insurance premiums.

“Businesses in Massachusetts have been hit especially hard during this pandemic, and we should take every action to help ease their financial burdens,” said AG Healey. “These businesses deserve to pay fair rates and not be overcharged during this difficult time.”

Sent a letter to Commissioner Anderson on May 12, 2020

On May 12, 2020, AG Healey sent a letter urging Commissioner of Insurance Anderson to direct insurers to lower commercial insurance premiums to reflect the lower level of “accidents and economic activity” as a result of the state-mandated shutdown. The following is an excerpt of the letter explaining her reasoning:

“In commercial auto, where the basis of exposure is a unit (e.g., number of vehicles), rates should be reduced to reflect the reduction in expected losses. While the appropriate premium reduction corresponding to the decrease in claims will vary among different types of commercial automobile policies, most sub-lines will experience a significant decrease. These include (but are not limited to) taxis, limousines, car services, school buses, vanpools, and other businesses that are shut down or operating at reduced capacity…

In the current state of emergency, we believe insurance companies should lower their premiums, and policyholders should receive a reduction in premium to reflect their lower risk. California has already required insurers to do this. In addition, some insurers are presently providing premium discounts on an ad hoc basis. In order to ensure a level playing field and to protect small business policyholders, we request that you immediately send a notice to every insurance company writing commercial automobile insurance in Massachusetts requiring a reduction in premiums commensurate with the expected reduction in claims.”

The AG suggests that such a reduction remain in effect until a substantial reduction in exposure to loss ends. The Attorney General also suggests additional ways that she believes the Commissioner and the DOI could help small businesses. These include

letting employers carry stand alone comprehensive coverage if that is all they need while their cars are not in use, or
by encouraging insurers to offer limited auto coverages through their general commercial policies.

called on the state’s Division of Insurance (DOI) to take immediate steps to ensure that Massachusetts commercial insurance policyholders, such as small businesses, pay fair auto insurance premiums that reflect the businesses’ decreased exposure to claims and accidents during the COVID-19 pandemic.

Similar calls have been made to lower both personal auto and workers’ compensation insurance as well

This is the third letter in two months that the Massachusetts Attorney General has sent to the Division of Insurance with regards to lowering insurance premiums during the COVID-19 Public Health crisis. On April 13, 2020 she sent a letter requesting that the DOI lower auto insurance premiums for personal insurance policyholders.

Two weeks later on April 30, 2020, the AG followed up with a request to the DOI to lower workers compensation. In that letter, she asked that insurance companies doing business in Massachusetts to offer both expedited audits as well as lower workers’ compensation insurance premiums.

“We are concerned about the difficult economic environment the pandemic is creating, especially for our small business across the state,” said AG Healey. “Lowering these premiums is one way to help defray some of their costs during a time when many of these companies are struggling to survive.”

For those who are interested in reading the Attorney General’s letters they can be accessed below: