Massachusetts Insurance Board of Appeal going under

On April 1, the Division of Insurance Board of Appeal, that hears approximately 50,000 motor vehicle insurance surcharge cases annually, will be dissolved reported the Boston Globe. The decision, said insurance commissioner Nonnie Burnes, came about after last year's implementation of a "managed competition" system that allows drivers dissatisfied with their insurance bills to switch carriers.

If insurance companies determine that a driver is more than 50% at fault in an auto accident, they can increase premiums by levying surcharges. These penalties can cost drivers hundreds of dollars annually and last for up to six years. Approximately 25,000 of the 50,000 appealed cases each year are overturned by the board and the drivers are reimbursed.

State lawmakers are in the process of signing a bill that would require the Board of Appeal to remain in effect.

The "managed competition" system was designed to aid consumers by increasing competition among insurance companies to offer better prices, services and features. However, this new system also called for the dissolution of the Appeals Board.

"Consumers should have an independent board to challenge a decision that could result in hundreds of dollars a year in higher premiums," said Deirdre Cummings, legislative director for the Massachusetts Public Interest Research Group, an advocacy organization. "This is a straight-up consumer protection."

Burnes disagrees saying the appeals board is not consumer friendly because it costs $50 for a hearing and can take up to 6 months for a driver's case to be heard. But, compared to a misapplied surcharge that could cost a driver hundreds of dollars over many years, $50 and 6 months seems like a small price to pay.

However, Burnes believes that some insurance companies' new "accident forgiveness" policy will allow drivers who feel that they have been improperly charged to drop their insurance carrier for one that will be more accident friendly.

Frank Mancini, president of the Massachusetts Association of Insurance Agents, which supports keeping the board, said the savings offered by accident forgiveness programs won't help all motorists because switching insurers won't necessarily lower a driver's bill.

"The accident follows you," said Mancini. "It doesn't go away if you move to another insurer."
Burnes has proposed a system whereby the insurance company would review a driver's claim of an improper surcharge. However, Mancini does not believe this would work since companies often review claims but end up not changing their original decision.

Being involved in an auto accident is stressful and costly enough without having to worry about a steep rise in your insurance premiums from an accident that might not have been your fault.