Insurers Voice Opposition to Proposed Mass. Auto Premium Surcharge

April 21, 2005

A proposal to surcharge auto insurance policyholders $15 million to pay for police training reportedly unfairly forces responsible motorists in Massachusetts to fund a program that benefits every citizen and business in the state. The Property Casualty Insurers Association of America (PCI) on Thursday announced its strong opposition to the measure.

“This is a ‘death by a thousand cuts’ proposal,” said Frank O’Brien, regional vice president for PCI. “It adds one more layer of bureaucratic expense to an already overburdened and overly expensive auto insurance system. At a time when the health of the auto insurance marketplace is seriously at issue and auto insurance reform is being seriously discussed, this measure sends exactly the wrong message.”

The bill would require insurance companies to pay a charge equal to one-quarter of one percent of all auto insurance premiums collected.
Insurers would reportedly almost certainly pass on these costs to drivers, which would increase premiums by about $4 per year. Nineteen insurance companies write auto insurance policies in Massachusetts, the smallest number of companies writing auto insurance in any state.

“We certainly understand the need for adequate police training,” said O’Brien. “But forcing only certain consumers – auto insurance purchasers – to pay for training that benefits all of us is inherently unfair. There is just no logical connection between the two. Such costs should be shared by everyone. We will do everything we can to alert policyholders to the negative consequences of this bill and urge them to contact their state legislators to oppose it.”

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