Goal: More Insurance Choices

By Jerry Kronenberg

Wednesday, March 12, 2008

Boston Herald

Market watchers hope Massachusetts’ new “managed-competition” car-insurance system puts Nationwide on our side - along with Geico, AIG and other firms that have avoided the Bay State for virtually decades.

“If consumers get more choices, that’s a good thing,” state Insurance Commissioner Nonnie Burnes said, saying more firms might enter Massachusetts once the new system starts on April 1.

Burnes said more than 80 percent of insurers quit the Massachusetts car-insurance business during the 30 years that the state heavily regulated rates. Other underwriters never set up shop at all.

All told, only half of the nation’s 10 largest car-insurance firms currently operate here.

However, No. 3 insurer Progressive recently announced plans to begin writing policies under the new system. So has smaller underwriter Peerless, a subsidiary of Boston’s Liberty Mutual.

“The new system hasn’t even started yet and we already have two new (insurers),” Burnes said. “I don’t think that’s a bad start.”

Massachusetts had 111 insurers in place when the state began setting car-insurance rates in 1977.

But 92 have left since then, with no one coming in to replace them.

“Under the old system, it was very difficult for most companies to make money here,” said Frank O’Brien of the Property Casualty Insurers Association of America. “But assuming managed competition sticks, I think we should see more companies coming here.”

Still, Stephen D’Amato of the Center for Insurance Research said adding new insurers “is only a good thing if it produces lower, fairer rates for consumers.”

D’Amato claims the new system gives insurers too much power to base rates not just on driving records, but also on things such as homeownership - factors he said favor the rich.

“Competition can be good,” D’Amato said, “but not the way it’s being implemented.”