Special insurance section: MassPIRG says good drivers could suffer under new insurance rating system

Robert Sears

A local consumer group predicts that some good drivers are doomed to find the state’s new managed competition insurance rating system is no bargain.

People with exemplary driving records could, in come cases, end up paying more than bad drivers, said Deirdre Cummings, the legislative director of the Massachusetts Public Interest Research Group.

While MassPIRG does not oppose competitive rating, Cummings said the plan that the state Division of Insurance has come up with is flawed by rates that are too high and unfair pricing practices.

Rates have gone down, but they should have dropped more, Cummings said.

“We predicted, and it appears to be coming true, that rates overall would be higher than they would have been under the previous system or a fair competitive insurance market,” she said.

Overall, insurance companies averaged a rate reduction of 7.1 percent under the new rating system which began on April 1, according to MassPIRG. The state estimates a slightly more aggressive drop, of 7.8 percent.

But even if there had been no change in the system, MassPIRG predicted the rate would drop by 11 percent based on a review of filings by the insurance companies over the past 10 years, Cummings said.

“That means we’ve already lost the equivalent of $150 million to the insurers,” she said.

A second concern is that insurance companies will rate individual drivers, using “a host of unfair, discriminatory factors,” Cummings said.

Her organization maintains that driving record is the fairest and least discriminatory way to set individual rates.

A report by MassPIRG and the Center for Insurance Research says, however, that factors including income, marital status, home ownership, education, age and race will be used in determining how much individual drivers will pay for their car insurance.

These rating factors are prohibited by the Division of Insurance, but Cummings says the companies find “back door approaches.”

For example, an insurance company doesn’t have to ask a customer if he owns a home if it knows he has a homeowner’s insurance policy, and multi-car discounts are a good indicator of marital status.

As a result, terrible drivers with multiple at fault accidents on their records who score well on the socio-economic scale stand to receive huge rate decreases at the expense of good drivers, Cummings said.

Robert Sears may be reached at