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Auto Rates
Date: Jan 26, 2005
Contributor: Mathew Ekdahl
Attorney General Thomas F. Reilly warned yesterday that changes in the state's safe driver insurance plan being pushed by an arm of the Division of Insurance would drive up the rates of some urban drivers by as much as 20 percent.
The changes, proposed by the State Rating Bureau, would replace the existing safe driver insurance plan, which places drivers in step classifications based on their driving history, with a point system. The goal of the plan, according to bureau officials, is to make the system simpler to implement and easier to understand.
But Reilly, in testimony scheduled to be delivered at a hearing on the plan today, said the Rating Bureau's proposal would confuse consumers, penalize good drivers, and drive up the rates of urban drivers by as much as 20 percent.
Reilly called the premium increases "hidden urban rate hikes." He said they result from the elimination of a number of rate caps contained in existing regulations. He noted drivers in urban areas already pay the highest premiums in the state.
A spokeswoman for Reilly declined to provide any examples of the pricing impact last night, but drivers in places like Dorchester and Roxbury currently pay several thousand dollars to insure a car. A 20 percent increase in a $2,000 premium would be $400.
Kevin P. Beagan, director of the State Rating Bureau, an arm of the Division of Insurance that was set up to represent consumers, said he doesn't agree with the attorney general's conclusions.
"It's not our intention to do anything more than change the way rates are based on driving records," Beagan said.
Beagan said it was his understanding that Reilly may be developing his own proposal to change the safe driver insurance plan.
In his testimony, which was provided to the Globe, Reilly criticized the State Rating Bureau's proposal as overly complicated and unnecessary at a time when a task force appointed by Governor Mitt Romney is working on sweeping changes to the existing auto insurance system.
"Consumers have had 15 years to familiarize themselves with the current SDIP," referring to the safe driver insurance plan, said Reilly, "and the new plan will confuse consumers rather than help them understand the rating system."
Reilly also said the proposal forces the state's best drivers to pay slightly more so drivers with one at-fault accident or moving violation can pay less.
"This goes against the very purpose of the merit rating mechanism, which is supposed to add incentives for good driving to the rating system," he said. "A merit rating system should not penalize the best drivers."
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