BOSTON, MASSACHUSETTS - Fewer Bay State drivers are appealing auto insurance surcharges for accidents or traffic violations, even though the odds of winning an appeal are favorable, a study by the New England Center for Investigative Reporting has found.
Data provided by the state Insurance Board of Appeals, which rules on traffic accident cases alone, shows that the number of drivers appealing those accidents – and the insurance surcharges that come with them – has declined by 36 percent since 2006 even though just over half of those drivers were winning their appeals. Only about 30 percent of motorists who appealed their cases were found to be more than 50 percent at fault and subject to a surcharge, the records show.
The state Registry of Motor Vehicles is seeing a similar trend in the number of traffic ticket appeals filed by motorists through the district courts.
“We are not in a position to speculate as to the reason for the decline in citation appeals,” said registry spokesperson Sara Lavoie.
The insurance board won’t speculate either, saying only that the division doesn’t track the reasons motorists appeal accidents which are subject to surcharges.
Some insurance critics suspect, however, that the trend may be due to both the fees imposed for appeals and a lingering recession that has left many drivers with little spare cash to file those appeals.
The fees, which start at $25 to contest a traffic violation before a clerk-magistrate and $50 to challenge an insurance surcharge, can add up quickly. Appealing either decision through the court system can add hundreds more to the tab.
The state Executive Office of Administration and Finance authorized fees more than a decade ago for drivers who appeal an insurance surcharge. The money collected goes to run the Insurance Board of Appeals. The fees for traffic tickets were updated by the state Legislature in 2009; those fees are collected by the district courts and are used to offset the costs of processing the appeals.
Originally imposed to curtail the burgeoning number of frivolous appeals cases from clogging an already overburdened court docket, the fees have done their job, registry officials say. The fees have helped clear thousands of traffic cases from court calendars and thousands more from the docket for the Insurance Board of Appeals.
In 2010, nearly 60,000 fewer drivers, representing a 21 percent drop, appealed traffic citations compared to the prior year, registry statistics show. In 2011, about 91,000 fewer drivers appealed traffic tickets than in 2009.
insurance-appeals-process.jpgView full sizeGraphic: NECIRAbove: The process for appealing an insurance decision.
The Insurance Board of Appeals, meanwhile, saw its caseload of surcharge appeals drop by nearly 20,000, or 36 percent, since 2006.
Although no official study has been conducted, insurance industry critics like Ivan Sever, state chapter coordinator for the National Motorist Association, a driver advocacy group, believes the reason for the sharp decline may be a result of the fee system imposed in the courts.
“People may find they can’t afford it financially,” Sever said. Factor in the costs associated with taking time off from work to pursue the appeals, Sever notes, and most motorists likely have second thoughts about challenging a ticket.
Belmont attorney Ralph Sullivan had second thoughts, too, and he appealed the citation he received for a lane change violation all the way to the state Supreme Judicial Court, challenging the fees as unconstitutional. By the time he was through, the $100 ticket cost him nearly $1,000 in filing fees.
“If I had to do that for a client, it would have been an $8,000 to $10,000 project” said Sullivan, who argued before the state’s highest court that motorists were being forced to pay fees not assessed in other types of civil or criminal cases, including drug or assault cases. Sullivan also contended the fees impede due process by preventing poorer drivers from challenging a traffic citation in court.
The SJC didn’t agree. Last year, the court ruled that the fees were justified even if a motorist was found innocent of the ticketed offense.
“If the person driving your car was your evil twin, you shouldn’t have to pay to tell the court that,” Sullivan said. “Charging fees to people to be heard for moving violations or to be heard on merit rating surcharges is a deterrent to the judicial process.”
State Rep. David B. Sullivan, D-Fall River, concurs. He’s sponsored two pieces of legislation that would ultimately prevent the courts from charging a $25 hearing fee to motorists found innocent of a driving offense. Both bills are currently under study before the Joint Committee on the Judiciary.
“If you are found not to be responsible, you shouldn’t have to lose money,” said David Sullivan, who proposed the legislation in 2010 after numerous complaints from drivers. “It’s an issue of fairness. It’s an issue of justice.”
The court does allow motorists to appeal without a fee provided they can show a hardship, but Sullivan says that can be difficult to prove if motorists are able to afford a car, insurance and gas.
Powered by Tableau
The American Civil Liberties Union, which in 2011 backed a lawsuit similar to Ralph Sullivan’s that unsuccessfully challenged a $275 fee imposed by the city of Northampton on parking ticket appeals, is currently pushing for legislation to allow those parking-related cases to be filed in small claims court where filing fees are $40.
“People should not face excessive, hugely impractical barriers to getting fair access to the courts,” said Christopher Ott, communications director for the American Civil Liberties Union of Massachusetts.
Ralph Sullivan and other critics think the fee system also creates a conflict of interest because traffic and accident cases are often decided by the same people who benefit from the revenue generated by the fees.
In 2010, fees for a hearing on a traffic ticket before a clerk-magistrate generated more than $3.7 million in revenues for the state Trial Court. Nearly $2 million more went into the state’s general fund from Insurance Appeals Board fees.
All that revenue comes on top of the millions more that drivers shell out to pay the actual tickets, some of which include an additional $50 head injury surcharge tacked on for speeding. Drivers convicted of drunken driving and reckless driving offenses must pay $250 in head injury surcharges.
Critics claim insurance companies are also able to collect millions in dollars annually in surcharges imposed for errant and sometimes innocent (those who don’t appeal) Bay State drivers over the six years following a ticketed offense. During that timespan, an offense and a surcharge remain on a driver’s record.
It’s not just the fees and surcharges that has rankled some driver advocates, though; “A lot of people think if you don’t speed, you don’t have to worry but the problem is that speed limits may be set inappropriately or illegally, perhaps on purpose,” said Sever, rattling off a list of commuter roads where he says speed limits are set inappropriately low.
Frank Mancini, president and chief executive officer of the Massachusetts Insurance Agents, said the surcharge system, which assigns a merit rating based on a motorist’s driving history, can be both complex and costly.
Drivers involved in an accident or moving violation are ranked not only against an insurance company’s “standard of fault,” Mancini said, but also by a host of other things, including the neighborhood in which a car is garaged, the age and sex of the driver along with his years of driving experience. But not all rating factors are public, which means few drivers actually know the exact mix that goes into determining a driver’s insurance rate.
The rating process has become an issue with the state attorney general’s office. In April, attorney general Martha Coakley raised concerns on what she concluded had been a failure by the insurance industry to fully disclose complete rating factors, including those for accidents and traffic tickets. Coakley cited a ballooning of insurance surcharges, inadequate record keeping and a lack of industry transparency.
“This information is necessary for a proper review of the rate to assure that consumers are treated fairly,” Glenn Kaplan, chief of the attorney general’s Insurance and Financial Services Division, said in a statement. A lack of transparency means few motorists know upfront how much their rates will rise if they lose an appeal, the attorney general’s office contends.
Coakley’s report found that insurance rates had increased in the last two years, sometimes by double digits, after years of rate cuts under the state-regulated system. Some firms also had passed along “inappropriate costs” and failed to adequately disclose their rating system to consumers, leaving insurance buyers with few ways to compare products, Kaplan states.
“It’s baffling,” said Joan Drew, of Framingham, who got hit with a surcharge that nearly doubled her premiums after a single-car accident on an icy stretch of roadway. “I asked my insurance company how someone with a good driving record and no other accidents could get such a sizable surcharge, but I never did get an answer that made sense to me.”
Today, four years after the state deregulated the auto insurance industry and moved to “managed competition” where companies set their own rates, the attorney general’s office remains watchful.
Insurance commissioner Joseph G. Murphy says the state Division of Insurance closely monitors auto insurance rates.
“Managed competition has been a great success in Massachusetts,” he said, touting the 13 new insurers which have moved into the state since deregulation in 2008. “Consumers now have more choice in cost and company when it comes to purchasing auto insurance.”
Some industry observers remain apprehensive, though.
“If you wipe away all the consumer protections and bring more companies into the market, it doesn’t necessarily mean a good deal for consumers” said Brendan Bridgeland, staff attorney and policy director at the Center for Insurance Research, a consumer advocacy group.
Bridgeland said the mix of factors that are considered in determining a driver’s rate along with a wide range of available insurance options has made it more confusing than ever to pick an auto plan. Simplifying policy terms and making comparative charts available to insurance buyers would help stem some of the confusion over rates and policies, he said.
It also would make it easier for drivers who appeal insurance surcharges to see what the impact of their appeal would have on personal insurance rates, critics note. After all, giving motorists the option of seeing their surcharge upfront could help them decide whether to invest in court and appeals board fees.
Or they could just take a page from Ralph Sullivan’s book.
“It pays to fight it,” he says. While he didn’t win his case, Sullivan said those who do can save $2,000 or more in surcharges alone. For many drivers, those savings can be very appealing.