Letters to the Editor

Insurance commish: Competition puts consumers in driver’s seat

Are you a good driver who is paying too much for auto insurance? Have you seen auto insurance commercials that advertise policies with the kinds of offers that you would want to purchase? Have you ever wondered why you have so few companies to choose from when it comes time to pick an insurer?

If so, you’re not alone. For years, Massachusetts has been the only state in the nation that sets auto insurance rates. Our system of overregulation made good drivers pay more than their fair share and gave all drivers just one policy option. It also forced numerous companies to pack up and leave. The result? Consumers everywhere felt shortchanged, leaving them to ask, “Why don’t I have access to the same lower rates and greater choices that drivers in every other state do?”

Fortunately, the Patrick administration is in the process of taking the frustration out of Massachusetts auto insurance. As Insurance Commissioner, I am responsible for giving consumers the answers they’ve wanted for some time now: lower rates for good drivers no matter where they live, more choices and better products.

Through managed competition, insurers can now compete for your business by providing a mix of policy benefits and setting their own rates while still being subject to my authority to enforce extensive consumer protections. Our new system means that we are truly putting Boston consumers in the driver’s seat for the first time in 30 years.

In November, our 19 auto insurance companies unveiled significant rate decreases and innovative coverage options and discounts. The five largest insurers put forward rate filings that would cut premiums from 6 percent to 11 percent. Each of these companies reported that at least 67 percent of their customers will see their premium bills shrink if they choose to stay with those companies. Preliminary estimates from the Division of Insurance show that nearly half of all Massachusetts drivers will save 10 percent or more on their 2008 auto insurance rates.

Our new system also gives companies the flexibility and incentive they need to compete for market share by offering an array of innovative products. Insurers have responded with discounts for good students, low mileage drivers, regular public transit users, customers who purchase homeowners or renters insurance with the same company and accident forgiveness for drivers involved in a minor accident after years of accident-free driving. These types of options empower consumers with opportunities to tailor their coverage and drive their individual rates down even further.

I am currently overseeing an extensive review of each company’s filing. My team and I will be making certain that insurers play by the rules and adhere to managed competition’s comprehensive set of consumer protections. Additionally, I also retain the ultimate authority to disapprove rates found to be excessive or unfair.

Consumers in Boston will begin to see the benefits of managed competition in mid-February — that’s when renewal notices for policies with April effective dates will arrive in the mail and good drivers will learn the exact amount of their 2008 savings. It’s never too soon, however, to take advantage of Massachusetts new auto insurance market.

Now that the Patrick administration has put you in the driver’s seat, contact your insurance agent or insurance companies directly. Make sure they know you plan on making the most of managed competition by shopping your good driving record around to find the best possible rates and policy options.

Nonnie S. Burnes
Commissioner, Massachusetts Division of Insurance