While auto insurance may seem like a dry topic, it is certainly one that affects many of our wallets. I fear that some of the vested interests in the insurance industry have been disseminating misleading information in the debate over auto insurance reform behind a façade of promoting "fairness." I hope to clarify some of the issues at stake in the debate, and I invite you to contact my office with any other concerns or questions you may have.

The primary group running ads for auto insurance reform is called "Fairness for Good Drivers." The organization describes itself as a "grassroots" coalition. However, the primary backers of this "grassroots" group are Liberty Mutual Insurance, Premier Insurance, Metlife, and other major insurance companies. The group’s website claims: "Right now, the Massachusetts Insurance Commissioner sets one rate for all the auto insurance companies and they must charge all their customers that rate. That’s why good drivers are paying for themselves and bad drivers with multiple auto accidents."

The claim that the Insurance Commissioner sets one rate that auto insurance companies must charge all consumers is misleading. The Commissioner does set a rate, but this rate is only a base rate. On top of this base rate, each individual driver pays a premium calculated on the basis of four criteria: his or her driving record, years of driving experience, the type of car, and the area in which the driver lives. As part of the current system, bad drivers already pay much higher premiums than drivers with good records, as anyone with an accident or traffic violation knows.

The real point at issue is not whether insurance companies can charge bad drivers more – they can! – but whether they can set their own base prices. The arguments for and against this kind of deregulation are manifold. But allowing insurance companies to set their own rates may lower costs for consumers, or it may raise costs. The Joint Committee on Financial Services in the Massachusetts legislature is currently charged with trying to figure out which result is most likely to transpire, and propose a bill accordingly.

In addition, and even more troubling, "Fairness for Good Drivers" and the Governor want to allow insurance companies to reinstate an "Assigned Risk Plan" in the Commonwealth. What this means in layman’s terms is that insurance companies would not be limited to the four current criteria (driving record, years of experience, car model, and residence location) when determining rates. Instead, they would be able to do what insurance companies in most other states can do, and take into account any number of other factors when determining rates, completely unrelated to a person’s proven driving record. Other states allow insurance companies to take into account your marital status, age, credit record, whether you rent or own your home, how many kids you have and at what ages, and a host of other factors when setting your rate. These practices are nothing less than overt discrimination, and often disproportionately affect young drivers, families with young drivers, poor people, and people of color. Talk about unfair!

I am not suggesting that all of the proposals on the table for insurance reform are unnecessary or unfair. Rather, I hope we can come together to take a hard look at the options, separate the hype from the heart of each, and act in the public – not private – interest.