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March 26, 2015

Healey blasts fee hikes for ‘last resort’ auto policies

Car owners with insurance policies issued through the state's "market of last resort" will likely face higher fees for late payment or bounced checks starting next week, despite objections from Attorney General Maura Healey.

The policyholders, a large percentage of whom live in urban and low-income communities, are insured through the Massachusetts Automobile Insurance Plan (MAIP) run by the industry-operated Commonwealth Automobile Reinsurers (CAR). The MAIP program exists for drivers who cannot otherwise obtain insurance through the voluntary market.

Healey, in a letter obtained by the News Service, urged the Division of Insurance on Monday to reject the fee increases that were unanimously approved by the CAR board on Feb. 25, arguing that the fees were inconsistent with policies written through the voluntary market. Healey also asked the agency to direct CAR to give "last resort" policyholders access to the same electronic billing options and associated fee discounts and waivers as customers insured voluntarily.

Insurers in Massachusetts are required to participate, and drivers are assigned through MAIP to individual insurers.

While these drivers have been turned away from coverage by auto insurers for various reasons, nearly one-third of the vehicles insured through MAIP are primarily used by drivers with perfect or near perfect driving records and 40 percent live in urban or low-income communities with significant minority populations, including Brockton, East Boston, Chelsea, Dorchester, Holyoke, Lawrence, Lowell, Lynn and Springfield.

Processing fees for MAIP policyholders would increase from $6 to $8 per installment under the changed fee structure, while late-payment, cancellation and dishonored check fees would climb $4 dollars to $29.

Healey, in her letter, said not a single other company surveyed by CAR in the voluntary market charged more than $25 for a late payment fee and only three companies charged more than $6 per installment.

"CAR's proposal to charge fees that exceed voluntary market norms and its repeated assertions that MAIP fees should not be competitive with corresponding fees in the voluntary market undermine the non-discriminatory intent of (the law)," Healey wrote.

An official with the Division of Insurance said the agency is reviewing Healey's letter, but is unlikely to intervene before the Monday deadline to stop the fee increases out of deference to the unanimous vote taken by the CAR board put in place, with consumer representation, to make these decisions.

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