Mass insurance agents get sneak peek at new state insurance plan

By Thor Jourgensen
Monday, June 6, 2005

LYNN – Elizabeth Puleo hopes a new state car insurance reform plan will eliminate the territorial driver rating system that the Lynn insurance agent and many of her colleagues and customers hate.
Gov. Mitt Romney acknowledged Puleo’s concern this week by including a 5 percent rate reduction for drivers with accident-free records in his insurance reform plan.
Those drivers account for 64 percent of the roughly 4 million auto insurance policies in the state.
The territory rating system assigns a number to each community across the state that reflects the accident insurance claim rate in the community. Puleo and other agents do not think residence should be a factor in the cost of insurance coverage.
Romney wants to let insurance companies set their own rates, though the state would maintain some oversight over rate changes.
Rates would rise for drivers with less stellar records, but not by more than 15 percent, Romney said. The proposed rate structure would also not penalize parents for their children’s poor driving.
The legislation includes a raft of other reforms, including a fee schedule for accident-related medical costs, a cap on the number of non-medical visits, such as visits to chiropractors and acupuncturists, and a consumers’ “Bill of Rights.”
Agents like Puleo and David Zeller have seen insurance reform proposals come ago for more than 30 years. In the last year, insurance firms have advocated for the creation of a high-risk pool that would separate drivers with the worst accident and violation rates from others.
Debate over the plan intensified last fall and the proposed pool was supposed to be in place in January before an industry lawsuit slowed its implementation.
Zeller said Romney’s proposal and competing arguments by prospective Democratic candidate for governor and Attorney General Thomas Reilly – have turned the insurance debate from one involving agents and company representatives to a discussion dominated by politicians.
Zeller said a high-profile debate could lead to productive change in the insurance industry.
“Once you stat thinking about improvements, a lot of good ideas become clear that move towards reform,” he said.
Romney said the system has smothered competition and spawned sky-high prices.
Romney said the state has twice the national rate of accident and injury claims, but the number of auto insurers doing business in the state has dwindled from 53 in 1990 to 19 this year.
His bill would also give police departments $700,000 to fight fraud. The Lynn police department has worked with the state Insurance Fraud Bureau since 2003 to investigate and prosecute fraud.