AIA Lauds Massachusetts for Giving Consumers More Auto Insurance Coverage Choices
7 January 1998
American Insurance Association Praises Massachusetts Regulatory Decision Giving Consumers More Choice in Auto Insurance Coverages
BOSTON, Jan. 7 -- The American Insurance Association today
praised a Massachusetts Office of Consumer Affairs ruling which clarified the
Commissioner of insurance's regulatory authority to allow insurers to offer
consumers a managed care option for auto injuries. The regulatory decision
allows Premier Insurance Company to provide a discount to consumers who choose
to access managed care for any injuries they sustain (first party coverage) in
the course of operating their vehicles. Medical care for other injured
parties is not affected.
"All along, we have believed the Commissioner has clear regulatory
authority to approve this option, despite efforts by special interests to
prevent it," said Anne M. Doherty, AIA director of public affairs.
"Fortunately, this decision preserves the benefits of the state's no fault
auto insurance system while increasing consumers' choices, making way for
reduced costs and potential consumer savings," she said. "We are pleased
consumers will no longer be prevented from choosing money saving options like
this one."
Last year, Commissioner Ruthardt had granted initial approval to Premier
Insurance Company to offer the optional endorsement. After objections were
raised by the trial bar, however, the commissioner agreed to hold a public
hearing on the matter. Trial attorneys benefit significantly from the current
system and are opposed to allowing consumers the right to choose managed care
for auto insurance coverage.
AIA had argued the managed care proposal represented a positive response
to recent criticisms insurers had not done enough to contain costs and could
help reduce bodily injury claims which drive up the cost of auto insurance.
The state has experienced significant growth in group auto discount plans
over the last year, a development which offers consumers short term savings,
but does nothing to address rising system cost trends. Bodily injury claims
in Massachusetts are far above the national average and have skyrocketed from
$104 per insured vehicle in 1985 to $190 by the third quarter of 1997. Auto
injury managed care has been effective in controlling excessive injury
claiming and medical claims "padding", a practice used to drive up pain and
suffering awards.
Unlike any other state, the Massachusetts insurance commissioner sets
private passenger auto insurance rates and must grant approval to companies
who wish to offer varied policy options.
"Optional managed care and other measures to reduce health care costs have
been allowed in several states, including Colorado and Pennsylvania,"
according to AIA Assistant General Counsel David Snyder. "In each case,
savings have been passed on to consumers through lower rates. These savings
result not only from reduced health care costs but by attacking insurance
fraud involving the padding of medical bills to increase the value of
lawsuits. Thus, options such as recently upheld in Massachusetts reduce
costs, improve consumer choice and fight insurance fraud. Other states should
consider such measures," Snyder said.
The American Insurance Association is a trade organization representing
250 major insurance companies, which provide all lines of property-casualty
insurance. AIA member companies provide 15% of the private passenger auto
insurance and 45% of the commercial auto insurance in the Commonwealth. AIA's
headquarters is located in Washington, D.C., and the association maintains its
Northeast regional office in Boston.
SOURCE American Insurance Association
