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Urban Drivers At Risk Of Losing Insurance Under Managed Competition05:57
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Massachusetts insurance agent Linda Webster (background) tracks all of the neighborhoods in the state where people have received non-renewal notices on their auto insurance. (Meghna Chakrabarti/WBUR)
Massachusetts insurance agent Linda Webster (background) tracks all of the neighborhoods in the state where people have received non-renewal notices on their auto insurance. (Meghna Chakrabarti/WBUR)

Peter Gatsoulis is a self-employed computer consultant. He lives in Roxbury. One day, earlier this month, Gatsoulis got a call from his auto insurance agent.

"They told me that I'd have to go in," Gatsoulis says. "And have to physically be there and reinstate the policies."

Gatsoulis has never had to do that before. His insurance has always been automatically renewed.

"They told me that I would have to be there because if I wasn't there my insurance policy would be dropped. It would be canceled."

Canceled, but for no apparent reason. Gatsoulis says he and his wife have clean driving records. He says they've been faithful customers to their insurance company.

"I was like, 'Hold it a second. I've been with you since 1994. That's a pretty long time. Why all of the sudden the change? I don't understand this.'"

It could be because he lives in Roxbury. The Urban Insurance Agents of Massachusetts, a trade association, and several Boston legislators, say that over the next year some 12,000 drivers every month - drivers like Gatsoulis who live mostly in urban or inner-city areas - are at risk of non-renewal because of what many agents are calling the "unintended consequences" of auto-insurance deregulation, also known as managed competition.

Linda Webster has been an insurance agent in Dorchester for more than 30 years. For most of that time, she was able to offer her low-income and minority clients insurance through a state-mandated program called "exclusive representative producers," or ERPs.
Massachusetts Auto Insurance Plan (MAIP) Consumer Guide
"They were created by the legislature back in the 70s," she says. "When the insurance companies were not insuring the urban areas, the inner-city areas. And the legislature stepped up and said, 'we need to be sure the people in those areas are protected.'"

The state eliminated the ERP program on April 1. Insurance companies are no longer required to offer policies in neighborhoods they consider high-risk.

Webster points to a large map of Massachusetts. It's dotted with dozens of blue push-pins. Brockton. Springfield. Worcester. Dorchester. Roxbury. One for every neighborhood where drivers are receiving non-renewal notices.

Webster says these are areas with higher claim rates. "The insurance companies cannot make as much money on those policies, as if the policy holder were living in Wellesley or Andover," she says. "Those people carry coverage, $100,000 or $300,000 on their policy, whereas the people of these inner areas may carry only the minimum liability coverage."

Many of Webster's clients are not native English speakers. They work two or three jobs and their finances are already stretched to the brink. She has sent out 90 non-renewal notices this month.

Fewer than five clients have called her back.

"Our concern is that we're going to have thousands of people driving around the Commonwealth for the next year that have no insurance coverage… We're just starting the crisis."

Massachusetts Insurance Commissioner Nonnie S. Burnes declined to be interviewed. She instead deferred to a statement released by Executive Office of Housing and Economic Development spokeswoman Kofi Jones.

"No one, anywhere in Massachusetts, will lose the right to auto insurance," the statement says.

Drivers who are non-renewed can "shop for insurance through a different agent or through their own research in the competitive marketplace...or through the Massachusetts Auto Insurance Program."

That program, also known as MAIP, is the new statewide auto insurance pool. It's how driver Peter Gatsoulis will now get his insurance, says his agent, Jason Calianos.

But Calianos says there's a problem with MAIP. "Most insurance companies on a down payment basis will charge 10 percent… [The MAIP] down payment mandates 25 percent. It's a big difference."

Nevertheless, Calianos likes the MAIP program, and overall, he likes deregulation. But he wonders why, in moving to "managed competition", the state didn't use the insurance pool as a safety net for drivers who are losing their coverage.

"Why not roll them automatically into the new system? At least they'll have insurance… It's managed competition, but I think you have to manage it a little better. I really do."

State Sen. Jack Hart thinks so, too. The South Boston democrat says managed competition has allowed insurance companies to "cherry-pick" their policy holders, and calls the resulting insurance lapse a "catastrophe" for his constituents.

Hart sought a six-month moratorium on non-renewals, but his staffers say the idea found little support in the Senate.

Hart subsequently sponsored an amendment that calls for the Insurance Commissioner to file a report by July 1 that "summarizes efforts" she has made to facilitate inner-city insurance holders into the managed competition system.

The legislature approved the amendment.

Still, for driver Peter Gatsoulis, the legislation is just a start. While he's not calling it redlining, or profiling, of the old sort, Gatsoulis can't fathom why, after 15 years with the same insurance company, he's not being renewed.

"I don't know. Is it basically because I do live in Roxbury, possibly? No idea."

Gatsoulis says tens of thousands of Massachusetts drivers could soon be asking themselves the very same question.

This program aired on April 24, 2009.

Meghna Chakrabarti Twitter Host, On Point
Meghna Chakrabarti is the host of On Point.

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