In an embarrassing retreat, Attorney General Martha Coakley has quietly withdrawn regulations she proposed more than a year ago to protect auto insurance consumers.
A three-paragraph message posted on the attorney general’s website says she remains concerned about unfair, deceptive, and discriminatory practices in the state’s auto insurance market and believes additional consumer protections are still necessary. But she’s scrapping the regulations she proposed to deal with those concerns and moving on.
“The office will take a fresh look at the best way to protect consumers in the auto insurance industry,” the message says.
Coakley’s spokesman, Brad Puffer, says the office will have no comment beyond the website message.
It’s a strange turn of events. Just before Christmas in 2009, Coakley issued a report saying the Patrick administration’s shift to a system of managed competition for auto insurance had hurt many consumers. She said average auto insurance rates were dropping far less than they would have had the state continued to set rates. And she charged that one-fifth of Massachusetts drivers, mostly minority and low-income residents, were paying higher premiums now than before managed competition.
Coakley issued regulations last summer to address the deficiencies she cited, focusing on the various analytical tools insurers use to set a driver’s rates. Prior to managed competition, insurers could only consider such factors as a customer’s driving history, their type of vehicle, and the vehicle’s garaging location in setting rates. With the shift to managed competition, the Patrick administration allowed insurers to consider a host of other driver attributes, but barred the use of such potentially discriminatory socioeconomic factors as income, home ownership, and credit ratings.
In her regulations, Coakley proposed going further, barring the use of factors that could be used as proxies for the banned factors. A customer’s payment history, for example, could be an indicator of income. A customer’s purchase of homeowners insurance could be used as a proxy for home ownership.
Insurers howled in protest, saying Coakley’s regulations would mean they would be subject to dual regulation by both her and the Division of Insurance. “It is simply intolerable and unworkable to have two dueling regulators,” James Harrington, president of the Massachusetts Insurance Federation, said at the time.
But then a funny thing happened. Coakley invited comments on her regulations and when the comment period expired she extended it again. She extended the deadline over and over again, for more than a year. Finally, she quietly withdrew them.
Deirdre Cummings, legislative director for the consumer group MassPIRG, said she didn’t know why Coakley pulled her regulations off the table. “We supported them,” Cummings said. “We are disappointed that they were pulled back.”
Some sources say officials from the Patrick administration pressured Coakley to back off and leave the job of regulation to them. If that’s the case, Coakley apparently got the message. This week she released an analysis showing that businesses were overcharged by $1 billion between 2004 and 2010 for commercial insurance on their trucks and car fleets. However, she didn’t propose new regulations or march into court to address the problem. Instead, she called on the Patrick administration to use its statutory authority to require insurers to lower their rates.