BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced Monday that she has sent a letter to Insurance Commissioner Joseph Murphy requesting immediate action to reduce overcharged commercial auto rates.
Coakley's office estimated that businesses in Massachusetts had been overcharged by close to $1 billion over the past seven years. The estimation was taken from data by the National Association of Insurance Commissioners and the Automobile Insurers Bureau. The data claims that rates in Massachusetts were excessive by 21.6 percent and that underwriting profits by insurers were significantly higher in Massachusetts than the national average.
Coakley requested that Murphy use his statutory authority to reduce commercial auto insurance rates in the commonwealth.
"These inflated commercial auto premiums impact virtually every industry in Massachusetts - from manufacturing, trucking, and construction to sales and services," Coakley said in her letter, "The added costs limit the ability of businesses to invest in Massachusetts and cost Massachusetts residents thousands of jobs. The problem is especially acute for small businesses, whose ability to create jobs is impaired by excessive rates."
Coakley explained in the letter that as a result of the allegedly excessive rates, economic activity has been reduced in the commonwealth and that if rates were kept in check, at least $450 million in overall annual economic activity and 3,000 additional jobs would occur in Massachusetts. Massachusetts law states explicitly that motor vehicle rates shall not be "unreasonably high for the insurance provided" or "excessive."
Since the commissioner has the authority to reduce commercial automobile insurance, the letter urges Murphy to undertake a full review of commercial automobile insurance rates, followed by appropriate regulatory action to reduce the rates to a reasonable level.
On February 10, Coakley requested Murphy reject a proposal from the Progressive Insurance Company to increase rates by 23 percent. Murphy did not, claiming that businesses could shop around for lower prices if they felt the Progressive increase was too high. Coakley noted in her letter that almost all companies are selling insurance at high rates, making shopping around not an option.