Smart Auto Insurance Blog

According to the article “Five Auto Insurers Must Recalculate Customer Bills” by Johnny Diaz on boston.com, the Massachusetts Attorney General settled with 5 Massachusetts auto insurance companies that might have charged higher rates to policy holders because of driving record information that was inaccurate.

The state of Massachusetts says the auto insurance companies failed to update at-fault information reported to The Comprehensive Loss Underwriting Exchange.  This is a private database which is used to determine driving histories.  The error may have resulted in higher premiums for some of the customers with these 5 companies.

The auto insurance companies will need to pay the state over $100,000 within 10 days as part of the settlement.  They also must identify affected customers within 120 days and recalculate their rates.  If this problem was not caught as soon as it was, quotes on auto insurance may have been inflated for these certain customers for years to come.

According to the article “AG Urges Changes In Auto Insurance” by Robert Weisman on boston.com, Massachusetts Attorney General’s office issued a report claiming that managing competition in the auto insurance system, started back in 2007, is not working.

The new system has attracted more auto insurance companies to the state, but Massachusetts auto insurance quotes are starting to factor in socioeconomic factors that aren’t related to driving record and this is concerning many.  The AG also faults the state Division of Insurance for not providing data to compare auto insurance quotes and make it easier for Massachusetts residents to shop around.

Attorney General Martha Coakley is afraid that consumers are not getting the best deal on their auto insurance rates.  She wants to initiate a few changes to better the system, such as requiring insurance companies to justify their discount rating system when determining their auto insurance quotes.  She would also like a Massachusetts website made readily available to residents to compare MA rates easily online.  The new system has showed mixed results, so it’s still to be determined how everything will pan out.

There is some concern for those with Massachusetts auto insurance, that insurers may be able to use credit scores and profession when determining one’s auto insurance rates.  According to Jon Chesto’s article “Auto Insurance Agents Push for Ban on Using Socioeconomic Factors” on tauntongazette.com, many other states use credit scores as an auto insurance rate factor. 

The article also discusses the debate going on now between insurers and consumers.  President of the Massachusetts Association of Insurance Agents, Frank Mancini, is worried that the ban to use credit scores might not survive through the next commissioner.  Because of this, his organization testified at the State House in favor of a movement that would ban the use of these certain factors as state law.

The Massachusetts Association of Insurance Agents believe that insurance rates should only be based on driving record, location, and how long someone has been driving.  This is how it worked under Massachusetts previous, highly regulated auto insurance system.  Most states allow factors such as education, credit scores and occupation when insurers calculate an auto insurance quote, and many feel this is unfair to consumers.

According to Jeffrey Krasner in the Boston Globe, Progressive Insurance’s website recently showed incorrect comparisons with other auto insurance companies, making their rates appear cheaper than they really are. A computer glitch compared the price of Progressive’s 6-month policy with 12-month policies from Commerce Insurance or Liberty Mutual. (Unlike most Massachusetts auto insurance companies, Progressive sells policies in 6-month increments.)

Progressive spokesperson Cristy Colt stresses that they weren’t intentionally trying to mislead consumers; rather, the system is meant to divide competitors’ prices in half to show fair auto insurance quote comparisons. For now, the rate comparison tool on their website is down, and Progressive is sending letters to inform about 21,000 consumers whose decisions may have been affected by the error.

(Photo credit: wallyg under CC 2.0)