The January 13th request was a follow-up letter to the initial request for a reduction back in April 2020
In a continued push to require auto insurance companies in Massachusetts to reduce their personal auto insurance premiums, on January 13, 2021, the Office of the Attorney General wrote again requesting that the Division order insurance companies “…to immediately reduce rates for Massachusetts personal automobile insurance by at least 25% on new, renewal and in-force policies”.
Our readers may remember that the Attorney General first proposed a reduction in auto insurance premiums in April 2020, arguing that the decreased driving and accident rates result from the Coronavirus pandemic causing a ‘windfall’ of profits for insurers.
New data from 2H-2020 supports a reduction, says the AG’s office
Citing new data from the second half of 2020, Glenn Kaplan, the Chief of the AG’s Insurance & Financial Services Division, asserts that if the Division takes no action, “insurance companies will continue to benefit financially to the detriment of Massachusetts residents.” In particular, he states the following statistics:
- Both the frequency of claims and loss cost per vehicle were significantly lower in the second quarter of 2020 than in the second quarter of 2019;
- Claims frequency has fallen by more than 50% for liability coverages and 70% for collision coverage;
- Loss costs also decreased by more than 35% for liability coverages and 80% for collision coverage.
As a result of these updated statistics, Mr. Kaplan states that while insures did offer discounts in the spring of 2020, they were “insufficient” in the face of the severe ongoing financial crisis facing many families in Massachusetts.
Contends that rate reductions are within the Commissioner’s authority
Asserting that the proposed rate reductions can be considered actuarially sound in reflecting the decrease in driving during the pandemic, he also argues that such a reduction would be within the Commissioner’s authority. Furthermore, should an insurance company object to such a reduction, Mr. Kaplan suggests that the Commissioner require a company to object with seven days” followed by an expedited hearing in which to set the appropriate rate.
While the Commissioner has not responded to the letter mentioned above, Agency Checklists will keep you posted of any additional details made public. In the meantime, those interested in reading the full letter can download it via the link below: