BOSTON - Fearing drivers would pay more for auto insurance, opponents are moving to prevent insurers from using credit scores and other financial information when pricing individual auto policies.
A coalition of state lawmakers, consumer advocates and some insurance agents are behind a bill set to be filed last night to curb the Patrick administration's plan to introduce competition into the state's auto insurance market.
Under the bill, auto insurers could not factor in credit scores, income, race, occupation, education and whether a person owns a home or rents.
"This bill will make sure drivers with a good record will get the best rates, and that's what auto insurance reform is all about," said Deirdre Cummings, legislative director for consumer group MassPIRG, one of the bill's backers.
She said the measure would ensure drivers, especially those in urban areas, such as Lawrence, aren't hurt as the state moves away from decades of setting insurance rates.
The bill has the support of more than 70 state lawmakers, including local Democratic Sens. Steven Baddour of Methuen, Frederick Berry of Peabody, Barbara L'Italien of Andover and Anthony Verga of Gloucester.
Berry said he's concerned any use of information such as credit scores or other financial data will hurt his constituents.
"My constituents' rates in Peabody and Salem in five years will be sky high," Berry said.
Insurance Commissioner Nonnie Burnes said the legislation is misguided. She said she's taken steps to protect urban drivers by maintaining a system that has suburban drivers subsidizing urban drivers.
Moreover, she approved rules banning the use of credit scores but allowing the use of other criteria MassPIRG and others want banned to give insurers flexibility.
"I have tried to explain to the critics why I don't think this is a good idea," Burnes said. "We're trying to develop a market that's good for consumers. To give companies some flexibility to offer products and services, as well as better rates to good drivers, we have to give them flexibility. (The proposed bill) would be so rigid as to not get the benefits to consumers we hope it will."
The Patrick administration is moving forward with what it calls "managed competition" after 30 years of having the state set auto rates. The administration believes the move will result in lower rates for drivers. Those rates will take effect April 1, 2008, and be in place until April 30, 2009.
Groups like MassPIRG and lawmakers like Berry are skeptical of the move to competition, noting that rates, on average, have fallen for four consecutive years. For this year, rates fell on average 11.7 percent for good drivers. Lawrence received an average 24 percent cut for reducing auto insurance fraud.
Leonard Degnan, former Lawrence mayor who's now an insurance agent, said he backs the legislation. He said considering credit scores or similar information would hurt people in Lawrence and other urban areas.
"Why should they be penalized for their auto insurance because of their credit score," Degnan said.
Degnan added that at a time when urban homeowners are seeing their mortgage rates rise, allowing the use of credit scores and other financial factors in setting insurance prices would further hurt city drivers.
But James Harrington, president of the Massachusetts Insurance Federation, said insurance companies need to use as much consumer information as possible to provide competitive prices. Limiting that information would stifle competition, he said.
"It would almost certainly result in very little competition," Harrington said.
Sen. Susan Tucker, an Andover Democrat who has made reducing insurance rates in Lawrence a top priority, did not endorse the bill. Asked why, she said she wanted to give the state's move to competition a chance to work. Auto insurers have until Nov. 19 to file their proposed rates for next year. Tucker said she will be watching closely.
"If our good, urban drivers' rates go up, I'll be the first to tell Commissioner Burnes to go back to the drawing board," Tucker said.
