Mass. Legislation Aims to Eliminate Confusion in Auto Insurance Billing

July 22, 2004

The Massachusetts Legislature has approved legislation that insurance agents hope will help eliminate confusion in auto insurance billing.

The Massachusetts Senate on Wednesday joined the House in approving House Bill 4675, which would change the effective date for auto insurance rates when they are set by the Commissioner of Insurance.

Currently, auto rates set by the Commissioner are by law effective on Jan. 1 each year, even though the decision setting the rates is not required to be finalized until Dec. 15 of each year. House Bill 4675 would change the effective date for the state-set rates to April 1 each year, beginning in 2007.

The massachusetts Association of Insurance Agents has worked on the bill for several years and had the support of insurers.

The Property Casualty Insurers Association of America (PCI) praised the action.

“This legislation will eliminate confusion for consumers and will eliminate some unnecessary extra costs and work for insurance agents and companies caused by the current procedure,” said PCI vice president and regional manager Frank O’Brien.

“Currently, consumers whose policies renew in the early part of the year get estimated bills based on the prior year’s rates because the rates for the new year are almost never finalized by January 1. After the rates are finalized, agents and companies must send out revised bills. Consumers naturally do not understand the reason for the revisions, so they call their agents and companies.”

“We applaud the Massachusetts Legislature for taking this step to bring more rationality to the Massachusetts auto insurance system,” added O’Brien.

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