Premier Insurance Hit Over Home- Auto Tie-In On Rates

Massachusetts Attorney General Martha Coakley's office said Travelers subsidiary Premier Insurance Company's auto policy rates discriminate against drivers who don't buy homeowners coverage as well, and called for a hearing on the issue.

The AG's Office said it has issued a request to the Division of Insurance to initiate an administrative rate proceeding to review the new auto insurance rates of Worcester, Mass.-based Premier, which trades as Travelers of Massachusetts.

Premier filed new rates with the Division of Insurance, which Ms. Coakley's office said "allegedly discriminate against consumers based on homeownership, in violation of Massachusetts regulations.

Premier's new rating system, effective Nov.1, takes into consideration a variety of factors when determining what an individual consumer will pay for insurance, the AG's office said.

According to the announcement, under Premier's filing, a consumer who purchases homeowners insurance with any insurance carrier can get up to a 5 percent rate reduction, while consumers who do not own a home cannot obtain this benefit.

Massachusetts insurance division regulations forbid auto insurers from basing rates on income, homeownership and other surrogates for income, such as education, occupation or marital status.

"Consumers should not be unfairly discriminated against in their purchase of auto insurance," said Ms. Coakley in a statement. "When regulations require that insurers not discriminate based on homeownership, it's important that all of the insurance companies follow these rules and operate on a level playing field."

According to Ms. Coakley, "increased competition has the potential to bring down rates and serve consumers' interests. However, it's important for our office to actively protect consumers and to pursue matters when rates are unfair or discriminatory. We will continue to review rate filings and take needed action to protect consumers."

Her office reported that in the past, the insurance division has approved insurer rate filings that are based in part on whether consumers have home insurance, but these rating methods have allowed consumers to obtain equal rate reductions if they have renters insurance instead.

Premier's filing, the AG's said, does not treat homeowners and renters insurance the same.

Auto insurance rate cases are handled by the Attorney General's Insurance and Financial Services Division.

The issue of tying coverage of home and auto coverage has also arisen in other states. Last year, New York Insurance Superintendent Eric Dinallo announced he had stopped insurers from non-renewing homeowners insurance for customers in coastal areas who were unwilling to buy a carrier's auto or life products as well.

It is unlawful in New York for an insurance company to drop a policyholder if the decision is based on whether or not they have other coverage from the company.

A spokesman for Premier said "We're happy to be able to offer discounts to consumers thanks to auto insurance reform in Massachusetts and we will work with the Division of Insurance and the Attorney General to resolve any issues."