Massachusetts Attorney General Maura Healey’s office sent a letter to the state’s Division of Insurance (DOI) this week, urging regulators to reject the proposed fee hike in the Massachusetts Automobile Insurance Plan (MAIP), the state’s private passenger auto insurance market of last-resort.
The industry-operated Commonwealth Automobile Reinsurers (CAR), which oversees MAIP, previously announced that its Governing Committee at its Feb. 25 meeting voted to raise the current monthly installment fee from $6 per installment to $8 per installment for policies effective Aug. 1, 2015 and later. The Governing Committee also voted to raise the current late payment/cancellation fee as well as the returned check fee from $25 to $29.
CAR said these fees had not been updated since April 1, 2009 when the MAIP installment plan and fee structure was standardized among all carriers and that its billing fee study shows the changes in fees would be appropriate to better align those fees with the expense of managing residual market business.
In his letter to the DOI, Glenn Kaplan, the chief of the attorney general’s insurance and financial services division, said a large percentage of MAIP policyholders live in urban or low-income communities with significant minority populations. And nearly one-third of the vehicles insured in the MAIP are assigned to drivers with perfect or nearly perfect driving records.
Kaplan also asked the DOI to direct CAR to give MAIP policyholders access to electronic billing and payment options and associated fee discounts and waivers comparable to those received by voluntary market customers. He argued CAR’s fee proposal is inconsistent with sound public policy and rate-making practices, and exceeds voluntary market norms.
A DOI spokesperson said on Friday, March 27, the enabling statute which governs the private passenger auto insurance residual market (MGL c. 175 §113H) provides specific guidance on how changes to the market’s plan may take effect, and allows the insurance commissioner to approve or disapprove proposed changes in full or in part, or send the proposed changes back to the plan’s operators for adjustment.
The spokesperson said the DOI has been reviewing the attorney general’s letter.
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