Corp. Welfare: Taxpayers Foot Private Auto Insurers’ Bills

Taxpayers Pay for Insurance Company Employees, Office Space, Telephones, Etc.

Joseph G. Murphy, Commissioner of Insurance.

The Commonwealth of Massachusetts is pouring millions of dollars in taxpayer money and resources into subsidizing private automobile insurance companies, according to a WHAV News investigation.

Worse, the investigation found, the Commonwealth uses its driver’s license-suspension authority on arbitrary orders from private insurance companies. WHAV followed one case through the system where a district court magistrate found “no probable cause” in an automobile accident case. A Massachusetts Registry of Motor Vehicles official, however, still required a driver-retraining course or would suspend the individual’s driver’s license.

“We take our orders from the insurance company, not the courts,” the state worker said by telephone. Despite use of state resources, the automobile insurance industry pockets driver surcharge insurance premiums.

Taxpayer-paid Massachusetts Registry of Motor Vehicles employees process paperwork and otherwise subsidize private insurance companies (office space, telephones, computers, etc.) in the administration of “Driver Retraining Programs” even when there is no state interest—criminal or civil—at stake.

“The safe driver insurance plan shall provide for a series of driver classifications based upon driving record which shall reflect individual driving experience. The plan shall provide for upward premium adjustments for drivers who in the preceding 5 year period have accumulated 3 or more unsafe driver points based,” according to state law. “Surchargeable “accidents may include driving with an expired inspection sticker, traffic tickets or minor fender benders for which there is no state penalty.

Registrar of Motor Vehicles Celia Blue.

Drivers must attend Massachusetts Driver Retraining Programs “if they have received notification from the Massachusetts Registry of Motor Vehicles that their driving privileges are or will be suspended due to three or more surchargeable events in two years,” according to the National Safety Council, a private, a nonprofit organization largely backed by wealthy corporations. Driver Retraining Program tuitions are also pocketed by National Safety Council trade allies.

In 2009, Massachusetts Attorney General Martha Coakley assessed automobile insurers and concluded, “Many consumers paid higher prices while companies increased profit targets in the rates,” “Company prices and rating behavior have become less transparent,” “Consumers do not have easy access to accurate price information” and “consumer protections have weakened.”

The corporate welfare practice, seemingly prohibited under both the Federal and state constitutions, has otherwise gone unchallenged.

WHAV solicited comments and clarifications from the office of Consumer Affairs Undersecretary Barbara Anthony, who oversees Joseph G. Murphy, commissioner of insurance, but none were received by press time. Attempts to reach Frank DePaola, acting secretary of transportation, who oversees Registrar of Motor Vehicles Celia Blue, were also unsuccessful.

Results of WHAV’s investigation will also be forwarded to the legislature’s Joint Committee on Financial Services. The committee is currently co-chaired by Senator Anthony W. Petruccelli (D-East Boston) and Rep. Michael A. Costello (D-Amesbury). Members include Senator Kathleen O’Connor Ives (D-Newburyport).