Putting automobile insurers in the driver’s seat

If you felt your automobile insurer ruled you at fault in an accident — a finding that usually leads to a sharp hike in your premium — would you rather file an appeal with the state or with your insurer?

Massachusetts has always offered drivers the chance to appeal automobile insurance surcharges to an impartial state official. Approximately 50,000 appeals are heard each year, and nearly half the time the insurance company's initial ruling is overturned.

But today the Patrick administration said it plans to scrap the state review process and replace it with one where drivers could only appeal to the insurer who ruled against them initially. If their appeal is denied, they could ask the same insurer for a second review.

Insurance Commissioner Nonnie S. Burnes called the new approach "a streamlined, consumer-friendly process" that is "in keeping with the Division of Insurance's commitment to consumer protection." She noted drivers can take their business elsewhere if they don't like the way their company handles the dispute.

Many insurance agents and consumer advocates had urged Burnes to retain the existing appeals system. "Failure to take this action will allow insurers to be the judge, jury, and executioner of thousands of drivers who receive surcharges each year," wrote Frank Mancini, president of the Massachusetts Association of Insurance Agents, in a letter to Burnes in October.

Deirdre Cummings of the Massachusetts Public Interest Research Group said an independent appeal process was particularly important in a less regulated and more competitive marketplace.

Even six of the state's automobile insurers, including Commerce Insurance of Webster, Arbella Insurance Group of Quincy, and Plymouth Rock Assurance Corp. of Boston, asked Burnes to retain the existing appeals system.

But Burnes concluded the current system wasn't working well. She noted the existing system requires drivers filing an appeal to pay a $50 fee and wait a year or longer for their case to come up for review because of a heavy backlog of cases. The new system will require insurance companies to notify customers that they have been found at fault in an accident and respond to a customer's request for a review within 30 days at no charge.

Meet the Author

Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

Burnes said no other state has an appeal process like the current one in Massachusetts. By ordering the change, she is essentially putting her trust in the state's automobile insurers and competition, which presumably will allow drivers to seek out another company if they don't like the way their current firm handles any dispute.

Attorney General Martha Coakley issued a cautious statement on Burnes's decision. "We welcome the commissioner's commitment to monitoring the performance of insurers in this regard, and to conduct a market conduct review after a period of time to assess whether consumers are getting a fair hearing with their insurer," she said. "We remain concerned, however, about whether an internal insurance company process can provide the same assurance of fairness for consumers as an appeal to a neutral third party."