NAII Says Mass. Budget Proposal Targets Insurance Industry

May 29, 2003

The National Association of Independent Insurers issued a bulletin indicating that the Massachusetts Senate Ways and Means Committee’s version of the state’s budget includes several provisions that will cause problems for property/casualty insurers.

“Although the Senate version does not impose all the costs of running the Division of Insurance (DOI) onto insurers, it significantly reduces the DOI budget, which could mean more delays for filings, a problem for both insurers and consumers,” stated NAII Senior counsel Gerald L. Zimmerman. The bill also includes a proposed surcharge on commercial policies and troublesome welfare intercept language.

In a letter to Sen. Guy Glodis, chair of the Committee on Insurance, the NAII pointed out several portions of the budget that could disrupt the Massachusetts insurance market. One of the biggest problems is the proposed surcharge on homeowners’ and commercial multiperil insurance premiums. Zimmerman called the provision “an unfair burden on the insurers who write these lines and on their policyholders, who will have costs passed along to them.”

The NAII also indicated that “the surcharge will have a greater cost for domestic insurers that write in other states because of the likely application of retaliatory tax provisions under those state laws.” Zimmerman indicated that “These companies will be especially hard hit because they will not be able to pass on those retaliatory costs. The NAII believes this is not a fair or appropriate method of dealing with financial difficulties faced by Massachusetts cities and towns.”

It also said that the “claims intercept provisions included in the bill will cause significant problems and delays in the insurance claims payment processes and will impose additional administrative costs on insurers.”

Zimmerman urged that the Committee “undertake a study to determine whether the extra costs imposed on both state and insurance company systems and administrative procedures are warranted by the likely returns through recoveries from insurance policy claims payments. We believe that these combined costs will outweigh the relatively small level of likely recoveries.”

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