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Bill

H 1263

An Act relative to reducing racial and socioeconomic inequities in auto insurance premium pricing

194th Legislature (2025-2026) Introduced by Manny Cruz and 1 co-sponsor

The bill requires auto insurers to set Massachusetts rates with a defined balance between statewide and territorial loss costs to reduce racial and socioeconomic pricing inequities

Accompanied a study order, see H4777
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Bill Summary · H 1263

Comprehensive Summary: H.1263 — An Act relative to reducing racial and socioeconomic inequities in auto insurance premium pricing

Quick facts

  • Bill Number: H.1263 (House No. 1263)
  • Title: An Act relative to reducing racial and socioeconomic inequities in auto insurance premium pricing
  • Introduced: February 27, 2025
  • Status / Schedule: Hearing scheduled May 27, 2025, from 10:30 AM–1:00 PM in A-2; Referred to the Committee on Financial Services (Feb 27, 2025)
  • Related bills: HD 2348 (replaces)
  • Filed: January 16, 2025

Purpose and intent

The bill aims to reduce racial and socioeconomic inequities in private passenger auto insurance premium pricing in Massachusetts. It seeks to limit wide disparities in rates across different territories and ensure rate filings reflect a more balanced weighting between territory-specific loss costs and statewide indicators. The overarching objective is to diminish the disparate impact of auto insurance pricing on historically disadvantaged communities.

Key provisions

Section added to Chapter 175E (new Section 4A)

The bill introduces a broad framework and definitions for how auto insurance rates may be developed and applied, including:

  • Definitions (Section 4A(a))
    Clarifies terminology used in rate making, including:
    • Classification and classification plan (how risks are grouped).
    • Commissioner (Massachusetts Insurance Commissioner) and filer (insurer, insurer group, or rating organization filing a rate).
    • Expenses, premium, rate, rate filing, rating factor, merit rating, rating organization, supporting information, and related terms.

Territorial classification and weighting (Section 4A(b)–(c))

  • Private passenger auto insurance rates may group risks by territorial classifications designated by the Commissioner.
  • For plans with territorial classifications, the rate filing must assign:
    • At least 25% but not more than 75% of weight to the statewide average loss cost indicator.
    • The remaining weight (up to 75%) to individual territorial loss cost indications.
    • Filers must actuarially justify both the territorial and statewide components with supporting information in the filing.

Prohibition on discriminatory practices and compliance (Section 4A(d)–(f))

  • A rate filing is deemed unfairly discriminatory if its rating plan does not conform to the weighted requirements (c) and the prohibitions (e).
  • Filers are prohibited from altering classification plans or rating factors in ways that limit, mitigate, or eliminate the impact of the required weighting (to ensure the statewide vs. territorial balance remains in place).
  • Filers must provide a complete explanation of how they comply with subsections (c) and (e).

Filing timeline and regulatory authority (Section 4A(g)–(i))

  • 60-day filing requirement: Every insurer licensed to write private passenger auto insurance must file a rate filing to comply with these provisions within 60 days of passage.
  • Intent: The act intends to reasonably limit rate differences between territories to reduce disparate impact.
  • Regulatory authority: The Commissioner may promulgate additional rules and regulations to implement the section.

Who is affected

  • Insurers and rating organizations that file private passenger auto insurance rates in Massachusetts (filer entities and rating organizations).
  • Insurance regulators (the Commissioner) responsible for approving, disapproving, or suspending rate filings and for promulgating implementing rules.
  • Policyholders in various territories, particularly those historically subject to higher or more variable pricing due to territory-based classifications.

Procedural and timeline aspects

  • The bill was referred to the Committee on Financial Services for study and public hearings.
  • A hearing is scheduled for May 27, 2025, in committee room A-2, as part of the bill’s initial review process.
  • If enacted, insurers would have 60 days from passage to comply with the new rate filing requirements.

Potential impact

  • Could reduce territorial price discrimination by requiring a defined balance between territorial loss costs and statewide indicators.
  • May lead to more uniform pricing across territories, potentially benefiting historically disadvantaged communities while increasing transparency in rate filings.
  • Requires insurers to justify territorial and statewide components with actuarial data, possibly affecting competition and rate dynamics in Massachusetts auto insurance markets.

Compiled from official sources — confirm details with the bill’s official record.

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