AAI Says Flawed Mass. Bill Would Add to Policyholders’ Premiums

A bill being considered by a Massachusetts legislative panel that would reportedly impose additional costs on insurers by requiring them to do the state’s work of policing whether or not criminals have paid restitution to victims is vague and impractical, according to the Alliance of American Insurers (AAI).

“This bill is flawed and unworkable,” wrote Frank O’Brien, vice president of the Alliance’s New England Region, in testimony submitted to the Joint Committee on the Judiciary. “It provides little guidance as to what insurers need to do, when they need to do it, and through what process. Therefore, it will produce significant delays in claims processing and create additional expense for every insurance transaction in the Commonwealth.”

Modeled after the state’s child support insurance intercept law, the bill (HB 1890) would require insurers, before paying a claim of more than $500, to check with the Commissioner of Probation to ascertain whether the claimant owes past due restitution.

This is the second bill introduced so far this session that reportedly seeks to establish a new insurance intercept requirement. Earlier this year, Gov. Romney (D) filed HB 3732, which among other provisions, proposed two new intercept programs for medical assistance and transitional assistance payments.

“Bills such as HB 1890 and HB 3732 are nothing more than state-mandated expenses that will pressure premiums to rise for all citizens,” according to O’Brien. “In addition, it is also clear that the state will incur additional expense in setting up and running the database needed to match those owing restitution with those being paid insurance claims. Given the state’s budget problems, one wonders if the trouble and expense is worth it for the amount of dollars the state may recover.”