Mass. Legislature Concludes Formal Sessions

The Massachusetts Legislature recently adjourned its formal sessions for the 2007-2008 legislative year, concluding a challenging session for insurers according to the American Insurance Association (AIA).

“Overall, the outcome was a positive one,” said John Murphy, northeast region vice president. “The industry was up against several major pieces of legislation that would have had a tremendous negative impact on Massachusetts consumers and insurers alike. Fortunately, those bills failed to complete the legislative process.”

Just four months into a new private passenger auto insurance system, the industry faced several uphill battles with regard to auto repair legislation. The state budget established a commission to examine and possibly set labor rates for auto repairs and the House passed a comprehensive auto repair bill that would require a study of the direct repair system, prevent appraisers from recommending or referring claimants to specific repair facilities, and limit the ability of insurance companies to use third party administrators for rental and glass coverage.

“Only recently has Massachusetts embraced a new system of managed auto insurance competition, which has shown to be extremely effective in its four months of operation,” explained Murphy. “The bill was poised to undermine that competitive spirit by micro-managing auto repair options. This legislation would present a major disruption to providing service to customers and AIA will remain vigilant to make sure it does not advance.”

Coastal homeowners insurance also received a great deal of attention throughout the session. The Senate passed a widely criticized bill earlier this month, but the House’s version of the legislation was not completed before session concluded.

“AIA is pleased no action was taken on this bill,” said Murphy. “There were aspects to the bill that would have been grossly counterproductive to a healthy insurance market. The legislation did not address the problem, and in fact, would have created more problems. AIA recognizes that this issue will remain a contentious topic of debate and looks forward to further educating consumers and legislators about the ramifications of this piece of legislation.”

On a positive note, House Bill 4948 is on Gov. Deval Patrick’s desk awaiting his expected approval.

“AIA commends the Legislature for supporting this legislation,” said Murphy. “This bill will extend the group discounts for the next few years that have long been available to consumers. Without the legislation many of these group discounts would have been lost due to the extremely high participation rate required under existing law,” said Murphy.

Further, AIA continues to work on excluding terrorism from commercial standard fire policies (H. 1027) and defeating oil spill remediation legislation, which would mandate insurance coverage for response costs, remediation and damages caused by leaks from a residential liquid fuel storage tank.

Bills could pass during informal sessions throughout the remainder of the year, when legislation can be approved - if there is no objection.