Massachusetts Gov. Mitt Romney has signed into law a bill changing from January 1 to April 1 the date that annual private passenger auto insurance rates take effect.
The measure had been backed by the Massachusetts Association of Insurance Agents (MAIA) to reduce costs and confusion surrounding the annual change in rates. The insurance commissioner typically does not announce rates until the December 15 deadline. This law change gives insurance companies and consumers a longer period of time between approval of the rates and their effective date.
In other action, lawmakers approved HB 4485, a bill that includes a provision requiring insurers to check with the Department of Revenue to determine if a claimant owes past-due taxes to the state prior to making any nonrecurring payment to the claimant in excess of $500. This bill is similar to an existing law requiring insurers to check for past due child support before claims are paid. Insurers opposed the measure due to the additional administrative burden it places on insurers.
The legislature has completed its formal sessions but it is still possible for bills to move. Among those being watched are bills affecting the residual market for homeowners insurance and workers compensation and a bill to bar the use of credit scoring.
The measure (HB4672) that would expand the coverages offered by the state’s homeowners residual market, the FAIR Plan, and provide the FAIR Plan with more flexibility in its pricing, has passed both house but lawmakers must still iron out differences between the two versions.
Despite that latter setback for the industry, insurers said the recent session was basically positive for the industry.
“Fortunately, the positives have far outweighed the negatives this year when it comes to insurance-related legislation and regulation in Massachusetts,” said Frank O’Brien, Property Casualty Insurers of America (PCI) vice president and New England regional manager. “We’ve seen a willingness to deal with some of the issues facing the insurance market in the state and a realization that changes have to be made to attract insurers and make Massachusetts a more competitive and attractive market for insurance companies. In the long run, the consumers are the real beneficiaries of these changes.”
O’Brien said major accomplishments included the passage in June of the commercial deregulation bill (HB 1700) which removes the requirements for prior approval of rates when insurers are issuing policies to a large commercial insurer.
O’Brien also noted that as part of the state budget, the legislature reduced the pre-judgment interest rate in medical malpractice cases to a floating rate that will start out at about one-half of the current 12 percent rate. “This will take some of the costs out of the malpractice system and it is a first step in reforming the system,” said O’Brien.
O’Brien said the overall positive actions of the legislature, combined with the administration’s and insurance commissioner’s efforts to reform the auto insurance market, have made 2004 a watershed year for Massachusetts insurers. “We are encouraged by the progress we’re seeing in reforming CAR to correct the problems with the residual market for auto insurance. It has truly been a year of progress in Massachusetts.”
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