Agents Balk as Mass. Weighs Ending Auto Surcharge Appeals

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People who have switched policies, and everyone who must renew them in the future, could lose their appellate right under the new regulations.

The Massachusetts insurance commissioner, addressing a concern of some insurers, is considering eliminating the unique right under which Bay State drivers have been able to appeal auto premium surcharges they consider unfair for accidents caused by bad weather, road problems or some other abnormal circumstance.

Each year some 50,000 Massachusetts drivers seek relief from the Division of Insurance’s Board of Appeals. Roughly 20,000 people succeed, saving themselves $8 million in insurance surcharges at roughly $400 a pop. There’s a 20,000-case backlog at the state Board of Appeals.

But in the latest wrinkle in the “managed competition” insurance system she instituted in April, Insurance Commissioner Nonnie Burnes is considering eliminating surcharge appeals as a vestige of the “fixed-and-established” insurance system under which drivers operated for 30 years before last spring.

Insurers argue the appeals process is no longer valid because it is not written into the managed competition law. Massachusetts is the only state with an appellate board to hear complaints when drivers felt they weren’t, in the industry’s term, “at fault” in an accident. In other states, aggrieved parties use the court system, an additional option in Massachusetts too.

Insurance companies also say with the state now requiring them to compete for business through premium prices, how and whether they levy additional surcharges — or repeal them — should be an additional point of competition between them. Some insurers like Liberty Mutual are already touting “accident forgiveness” plans.

Maintaining accident descriptions and penalties “could have the unintended consequence of affecting competition between insurers,” said James Harrington, of the Massachusetts Insurance Federation, which represents insurance companies.

Burnes and her staff were reluctant to discuss the issue publicly, but she said in a statement that they are examining the issue.

Experts do not expect the Board of Appeals to disappear entirely, since it also holds hearings on insurance cancellations and license decisions made by the Registrar of Motor Vehicles.

But under the rules Burnes still must promulgate, people who have switched policies, and everyone who must renew them in the future, could lose their appellate right under the new regulations.

Agents have balked at the idea of killing the appeals process, even while acknowledging that managed competition makes it tricky.

“From our standpoint, if a person has a problem with being at fault, our feeling is that they should have the ability to appeal that to an impartial third party to hear that complaint,” said Frank Mancini, president and CEO of the Massachusetts Association of Insurance Agents.