For Immediate Release
October 27, 2004
Please Contact: Colin Durrant (617)722-1650 or
Dalié Jiménez, 617-722-1650

Barrios Says New Car Insurance Proposal Needs More Consumer Protections

“Safe drivers should never loose the right to choose their insurer,” said Barrios. “Any changes made by the Division of Insurance must protect these responsible consumers from being penalized in the pocketbook because of discriminatory practices by insurance companies.”

The hearing was held to gather public comment on a draft assigned risk proposal offered by the Commonwealth Automobile Reinsurers (CAR) that may affect -- by the insurance industry’s own estimates – over a million insured drivers. Under the proposal, drivers deemed “high risk” would be assigned randomly to an insurance company.

Consumer protection experts say the plan could open the door to the possibility of unfair and discriminatory insurer practices, including the denial of insurance based on credit scores, income levels, and neighborhood ethnicity. Seven of the eight communities Senator Barrios represents are among the top thirteen territories deemed “high risk” by insurers.

"The insurers drafted this proposal, so it's no surprise that the interests of consumers were ignored," said Stephen D'Amato, Executive Director of the Center for Insurance Research, a consumer advocacy group based in Cambridge. "The proposal amounts to government regulation of the insurers, by the insurers, and for the insurers."

Among the specific consumer protections being sought by Barrios are:

• Safe drivers, regardless of where they live, should not lose their ability to select the insurer of their choice. Consumers choose their insurer for a host of economic reasons, including overall cost, quality of service, discounts and rebates.
• In order to protect against perceived or actual unfair and discriminatory practices, insurers must be required to provide consumers with a list of specific factors used in the company’s decision to cover or deny, or to label the consumer as “high risk.”
• Written notice must be provided to any consumer denied coverage with specific reasons for denial, and consumers denied coverage must be able to appeal that decision.
• A driver who has been labeled “high risk” and placed in the proposed assigned risk pool shall receive the same premiums, discounts, and services as that driver would have received if written voluntarily by the insurer.
• Words must be backed up with action. Consumers will only be protected from unfair business practices if the Division of Insurance focuses more resources on enforcement and penalties.

To receive the full text of Senator Barrios's testimony before the Division of Insurance please contact Colin Durrant at Colin.Durrant@state.ma.us

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