The Boston Globe

A California consumer group yesterday waded into the debate over how to change the Massachusetts auto insurance system, saying repeal of the state’s no-fault system could theoretically save every driver about $50 a year in premiums.

Harvey Rosenfield, founder of the Foundation for Taxpayer and Consumer Rights in Santa Monica and author of a 1988 auto insurance reform measure in California, said no-fault, where lawsuits are restricted and drivers settle claims with their own insurer regardless of who is at fault, is a recipe for fraud and waste.

“No-fault is a bonanza for insurance companies,” Rosenfield said at a news conference in Boston. “It’s a disaster for consumers.”

The foundation’s focus on Massachusetts was indirectly prompted by Wal-Mart, the nation’s largest retailer. Wal-Mart early last year settled a class-action lawsuit alleging it had violated the Massachusetts item-pricing law. As part of the settlement, Wal-Mart agreed to pay $100,000 to the foundation to work on consumer education issues in Massachusetts.

The foundation, using 2002 data collected by the National Association of Insurance Commissioners, found that states with no-fault systems had liability insurance premiums that were 19 percent higher than those in states with so-called personal responsibility systems.

In personal responsibility systems, drivers held at fault in an accident can be held responsible in court for injuries and damages to another person and their property and are barred from making medical claims against their own insurer. Nine states have no-fault systems, while the rest have some form of a personal responsibility system.

According to the foundation’s report, states like Connecticut, Georgia, and Pennsylvania have kept a lid on premium increases or seen them drop after repealing no-fault laws. One major exception is Rhode Island, which has a personal responsibility system but rates that are nearly as high as those in Massachusetts.

Daniel Johnston, president of the Automobile Insurers Bureau of Massachusetts, said the state’s insurers are divided on no-fault. He said there are advantages and disadvantages to a no-fault system, but said it was simplistic to blame high rates here solely on no-fault.

“Massachusetts premiums are high because we have more accidents than anyone else,” he said.

Johnston also said that liability insurance coverages in Massachusetts have dropped 30.5 percent since 1993, an indication that no-fault is not forcing rates upward.

Chris Goetcheus, a spokesman for the state’s Division of Insurance, said a task force appointed last year by Governor Mitt Romney to revamp the state’s auto insurance laws is investigating all aspects of liability insurance coverage.
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Bruce Mohl can be reached at [email protected]