BOSTON — It's no surprise that a single 27-year-old driver with a clean driving record and a 57-year-old married driver involved in a major accident every three years would pay different prices for auto insurance.
What is surprising, according to a report released yesterday, is that the younger driver with the unblemished record would pay 5.2 percent more, while the older, bad driver would pay 14 percent less, for auto insurance policies beginning April 1.
The report by the Massachusetts Public Interest Group and Center for Insurance Research found insurers using marital status, homeownership, education and age to determine how much people will pay under the state's new managed competition system, even though they're not allowed to.
"We were told we were moving to a system that rewards good drivers, penalizes bad drivers and bans the use of socioeconomic factors," said Stephen D'Amato, a consultant to the Center for Insurance Research. "What we're finding is the exact opposite."
According to the report, Commerce Insurance offers a 5 percent discount to people who also have a homeowner's policy. Safety Insurance offers a 10 percent discount for drivers who have multiple policies.
"In areas throughout Massachusetts, you'll find people who have lower incomes or are younger or don't own homes and aren't married and don't have two cars," D'Amato said. "Those people are going to pay higher rates."
The distinction is particularly severe in places like the Merrimack Valley, where insurance costs have been historically high.
"If you're living in Lawrence, there are more renters and more single people," D'Amato said. "There are a higher percentage of families in Andover. If you rent, you're very unlikely to have a homeowner policy. You do if you have a mortgage."
Sen. Susan C. Tucker, an Andover Democrat whose district includes part of Lawrence, called the report "disturbing."
"I believe that your insurance should be based on your driving record and not your income," Tucker said.
Tucker, who has worked for years with state and local officials to reduce auto insurance fraud in Lawrence, said she's worried those efforts to control fraud and accompanying higher costs could be reversed.
"My major concern is the potential for skyrocketing urban rates after years of work put into fraud reduction," Tucker said.
The state last allowed insurers to compete in 1977, and rates soared in urban areas. That was an important factor in the Patrick administration "managing" competition.
The state Division of Insurance rigorously defended managed competition. Spokeswoman Kim Haberlin said in a written statement that the report is "filled with the same old baseless, misleading arguments."
She said regulators have "reviewed all company filings to certify that rates are fair and that drivers' premiums are based on how well they drive and not who they are."
The report and the state response highlights a major dispute as managed competition goes forward.
Consumer advocates argue discounts are not just an end around the Division of Insurance ban on using anything but driving records to price insurance. Insurers generally believe there is a link between income and accident rates, and by attracting more affluent drivers with discounts they can insure less costly drivers. D'Amato and other consumer advocates say there is no connection between income and accident claims.
State officials, meantime, say they're protecting consumers from discriminatory pricing and contend discounts are an appropriate way for companies to compete for business.
They cite this week's move by Progressive Insurance, the nation's third-largest insurer and first new insurer to enter Massachusetts in more than three decades, as proof they're right. Progressive is offering good drivers an average 18 percent discount from last year.
Tom Minichiello, a Bradford insurance agent, said he thinks discounts are a sign the new system is working.
"When all settled, folks will be very happy if they have a good driving record," Minichiello said, "and they can shop for best buy out there."
Edward Mason may be contacted by e-mailing emason@gloucestertimes.com
