Consumer advocates applauded and at least one insurance company approved, but Massachusetts insurance agents will not be pleased if Attorney General Martha Coakley’s proposed auto insurance regulations come to pass.
These regulations would micromanage the day-to-day business of Massachusetts’ independent insurance agents, disrespecting their ability to do their job professionally, according to testimony from Francis Mancini, head of the Massachusetts Association of Insurance Agents, during a recent hearing on the matter.
The proposals increase Coakley’s powers as the watchdog for insurance companies and agents, and also double up on regulations already in force – such as a current regulation that insurers cannot set prices based on customers’ credit history – as well as set up additional requirements.
Mancini found fault with a number of the proposals dealing specifically with agents. Under the new regulations, insurance agents would be restricted from steering business to an insurer based on the amount of compensation that agent would get from the company.
As written, the rule is far too broad, Mancini argued, and would lead to agents automatically recommending the company with the lowest compensation – regardless of which policy may be more appropriate – out of concern they might be in violation of a rule against steering to companies that compensate better.
In addition, agents would also be required to tell their customers all the insurance companies with whom they have contracts. If they do not choose to provide quotes for all those companies, the agents must list reasons why. Mancini argued that stipulation heaped far more work upon agents’ backs, with little to no benefit for consumers.
Overall, the regulations heaped more burdens on independent insurance agents still adapting to sweeping 2008 de-regulations in the auto insurance industry in Massachusetts.
But not all business advocates were unhappy with the proposals. John Donohue, CEO of Quincy-based Arbella Insurance, said his company supported Coakley’s attempts to demand fair advertising among insurance companies.
Previously, a competitor had quoted Arbella’s annual auto rate against its own lower price in a television ad, but failed to mention that its price was only for six months of coverage, Donohue said. Coakley’s proposal specifically lists that practice as a violation.
Barbara Anthony, undersecretary of the state’s Office of Consumer Affairs and Business Regulation, which oversees the Division of Insurance, said she looked forward to working with Coakley’s office, and noted while overlap may exist, her office was still reviewing the proposals.
Consumers and advocate groups at the hearing approved the added measures. Deirdre Cummings, legislative director for the Massachusetts Public Interest Research Group (MASSPIRG), said insurers should “focus more on how we drive than who we are,” during her testimony.
In a statement sent to Banker & Tradesman, Coakley said that although de-regulation had brought about positive changes, her office “feels that many improvements should be made within the system to better protect consumers.” The new proposals are intended to enhance competition and enable customers to more easily shop for insurance, she said.
