Haverhill
Payano Calls for Auto Insurance Formula Change to Reduce Costs in Urban Areas
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State Sen. Pavel Payano, representing Lawrence, Haverhill and Methuen, wants to reduce auto insurance rates in urban areas by making the statewide average part of the rating formula. Payano and other lawmakers are looking to change how heavily a resident’s ZIP code weighs in determining the cost of their auto insurance, claiming that people of color in low-income and urban areas pay higher rates. But insurance companies say the move would take away one of the only tools left for them to determine rates, and could raise insurance payments for all. “Right now in Massachusetts, residents living in urban and diverse communities are being forced to pay substantially more than their suburban counterparts for auto insurance,” said Payano, who filed a bill that would change the rating formula to give no more than 75% weight to a person’s local area and 25% weight to a statewide average, aimed at tempering the rates in urban areas. Payano based the formula off of Connecticut’s insurance rating territory policy.