Baystate Steers toward competition

By Boston Herald editorial staff Wednesday, November 21, 2007

Critics are trying to spin this week’s auto insurance rate filings as a disappointment - “only” an average 8 percent drop in rates next year, can you imagine! - but the criticism is off the mark.
For starters, thousands of Massachusetts motorists will be able to shop around for better deals thanks to new discounts companies plan to offer. Depending on the insurer, everything from a student’s good grades to sticking with the same company might buy a few bucks off the premium.

And while Monday’s filings came only from the 19 carriers already writing policies here, new carriers have until Feb. 15 to qualify to enter the market for next year. You can bet the out-of-town players will be studying every detail of the filings to prepare.

Meanwhile, the vast majority of Massachusetts motorists will see their rates go down. Filings from insurers with the largest market share indicate average rate cuts between 6.2 percent (Arbella) and 10.7 percent (Liberty Mutual).

USAA made the boldest move, announcing average cuts of 15.5 percent, while Encompass Insurance is already rethinking its mousy proposal to reduce rates by only 3.4 percent (companies have a week to amend their filings).

In a word, it’s called competition. True, some drivers won’t see any reduction in rates. Others (inexperienced drivers or those with checkered driving records) might see their rates go up slightly (although none will see a rate increase of more than 10 percent).

Some policy-makers remain stubbornly opposed to the market approach and place their confidence instead in the protectionist policies that drove dozens of insurers from the state.
But this modest effort at “managed competition” has resulted in modest improvements - pretty much the way Insurance Commissioner Nonnie Burnes designed it.