AG finds herself on 2 sides of a dispute

Attorney General Martha Coakley finds herself on both sides of a legal dispute over the state’s competitive auto insurance system.
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As the state’s top lawyer, Coakley is defending the Patrick administration against a lawsuit that alleges some of the state’s auto insurance rules unfairly favor national companies new to the market, such as Geico and Progressive Insurance.

But as a representative of consumers on auto insurance issues, she has been critical of those same regulations.

In a scathing report her office released just before Christmas, Coakley said the state’s so-called managed competition auto insurance system has not saved drivers money. She also accused Governor Deval Patrick’s administration of “playing favorites’’ when it comes to setting insurance rules.

“Several new rules advantage certain carriers and disadvantage others,’’ Coakley said in the report, citing the same regulations she is supporting in court.

The lawsuit against the administration was filed by Arbella Mutual Insurance Co., a Quincy carrier that claims the rules put it at a disadvantage. Oral arguments have already been heard, and a decision by the state Supreme Judicial Court is expected by the end of the month.

Coakley, who is in the final week of her campaign for US Senate, was not available for comment. A spokeswoman, Amie Breton, said the attorney general is required to assume several roles, including representing state agencies in court, while also advo cating for consumers.

“Here, for example, we defended the Division of Insurance’s legal right to take certain policy actions, but that doesn’t necessarily mean that we agree with DOI’s policy choices. It just means that we recognized [the division’s] authority to make those choices,’’ Breton said in an e-mail.

Doug Bailey, a spokesman for Arbella, said the insurer welcomed Coakley’s support.

“On public policy, she appears to agree with our point of view,’’ Bailey said. “The legal issue, however, will be decided by the SJC.’’

Peter Robertson, an attorney representing many of the insurance companies that favored the 2008 move from a highly regulated system to one that allows insurers to set rates, said Coakley should not have included in her report issues that are pending in court.

He said Coakley argued in court that state officials acted reasonably in imposing the rules, but in the report accuses them of playing favorites.

“Doesn’t that imply it’s not reasonable?’’ Robertson said.

A Patrick administration spokesman declined to comment on Coakley’s legal and public policy positions.

“We respectfully disagree with the findings in the report in general,’’ said the spokesman, Jason Lefferts.

Nonnie S. Burnes, who championed the revamped auto insurance system when she was state insurance commissioner, could not be reached for comment.

Coakley and her staff have long raised questions about the administration’s nearly two-year effort to give insurers more control over the rates they charge, but the objections have been fairly muted.

Last month’s report, called “Automobile Insurance: The Road Ahead,’’ was more pointed. It said the insurance overhaul has been a disappointment for consumers, with average rates dropping 6 to 8 percent, well below the 10 to 11 percent reduction that would have occurred if the insurance commissioner had continued to set rates.

Coakley also said one-fifth of Massachusetts drivers, mostly minority and low-income residents, are paying more now than they were before deregulation.

Managed competition has attracted new companies to the state, including Geico and Progressive.

To encourage them to do business here, Burnes approved regulations allowing them to avoid having to insure high-risk drivers for two years. She also gave other insurers some leeway on what they charge high-risk drivers. Both rules are being challenged by Arbella as unfair and beyond the commissioner’s authority.

Coakley, in her report, sided with Arbella, but included a footnote indicating she was defending the commissioner’s right to impose the rules. She said she plans to issue regulations to address many of the problems she identified, but it’s unclear whether that will happen if she goes to Washington, D.C., to serve in the Senate.