Berry: Car insurance reforms must avoid ‘rate shock’

A comprehensive plan to shift responsibility for setting automobile insurance rates from the state to insurers cannot come at the driver’s expense, said state Sen. Frederick Berry, D-Peabody.Berry and colleagues have proposed legislation designed to prevent “rate shock” two years from now when the proposed plan would be in full implementation.”The proposed language in the bill keeps in tact the overall plan for competition but provides further important protections for consumers,” Berry wrote in a letter sent to Senate colleagues days after the proposed plan was unveiled on Oct. 5.Revere insurance agent Daniel Rizzo shares Berry’s concerns, saying drivers in Lynn, Revere and other cities could end up paying for coverage under Insurance Commissioner Nonnie Burnes’ managed competition plan.”Competition on the surface sounds great but it is very harmful to let companies come in if they only want to cherry pick customers,” Rizzo said.Insurance agents plan to rally today at the State House in support of the legislation.Rizzo is concerned that insurers operating in a partly regulated, competitive market will shy away from densely populated areas with crowded roads in favor of insuring rural and suburban drivers.”It’s not that we’re worse drivers,” he said.Burnes at the start of this month proposed shifting rate setting from the state to companies over a 12-month period beginning next April 1.Massachusetts has 4 million drivers and is the only state where regulators, not the industry, set insurance rates.”This new market is designed to produce lower rates for good drivers wherever they live,” Burnes said when she unveiled the plan.Her reform proposals consider driving experience and a driver’s record as the primary factors for setting insurance rates. Under the state reforms, insurers will not be able to factor in a driver’s credit history, education, homeownership status or other information to set rates.Berry said the reforms should also prohibit one insurance company from setting up several different companies under the same holding company that offer different rates for each company.He also supports requiring companies to offer discounts to various groups and organizations based on specific actions undertaken related to driving and reducing risks and not just membership in the group.Berry also wants the state Attorney General’s office to oversee consumer protection as part of the transition to managed competition.