Effective April 1, 2008, Governor Deval Patrick deregulated the Massachusetts auto insurance system and implemented a system called "Managed Competition." Under Managed Competition, insurers set their own prices for auto insurance. Since April 1, 2008, companies can and do charge consumers different rates and calculate premiums based on factors that were not used in previous years. As a result, some people are charged more, others less, and each insurance company can offer you a different price. Because of the wider array of prices, coverages, discounts, and benefits that will be available, all Massachusetts residents should shop carefully for auto insurance.

In order to protect the interests of consumers, the Attorney General's Office has closely monitored the actions and representations of auto insurance companies throughout the transition to Managed Competition. In December 2009, the AGO released a comprehensive report pdf format of Auto_Insurance_Report.pdf
file size 1MB on the auto insurance market in Massachusetts. The report makes strong recommendations on how to improve market conditions and provides a detailed accounting of how the market is currently operating, how insurance companies are profiting, and how many consumers are facing large price increases.

If you have questions or concerns about Managed Competition, you should contact the Division of Insurance at (617) 521-7794. If you believe an insurer has treated you in an unfair or deceptive manner, please file a complaint with the Attorney General's Office or contact the Attorney General's Insurance and Financial Services Division at 1-888-830-6277. In addition to investigating violations of law, the Insurance and Financial Services Division provides voluntary mediation services to consumers who are having problems with insurance companies.

What Is Changing?

Until 2007, insurance rates were set by the state for use by all companies, although individual companies were permitted to lower their rates if they chose. Then, a policyholder was charged based on a vehicle's territory and the drivers' record. In addition, all companies were required to provide policies to almost any driver that applies for one. In 2007, the Division of Insurance introduced a new, deregulated system termed "managed competition." Under the new deregulated system, insurance companies are allowed to set their own rates, and use different terms and conditions. Insurers are also permitted to reject applicants.

Under the deregulated system, premium amounts, rates, coverages, fees, discounts, and benefits may vary widely by insurer and will be based on an assortment of new rating factors. As a result, you will have to shop carefully to find the coverages best suited to your needs and the best prices for those coverages. In addition, insurance companies will not be required to offer some of the discounts that they were previously required to offer, such as the Public Transit, Multi-Car, and Driver Training discounts. However, new types of discounts may be available to certain drivers.

Who Will Benefit from These Changes? Who Will Be Hurt by Them?

Although some drivers saw their premiums go down during the first year of Managed Competition, on average premiums did not go down as much as they would have in a regulated market. Moreover, insurers estimate that about 20 percent of drivers experienced a premium increase during the first year of managed competition. (Under the regulated system, it was expected that almost no drivers would have experienced rate increases).

Under Managed Competition, your driving record has a less significant effect on your premium than it previously did. Young drivers (meaning people in their 20's and early 30's), senior citizens, urban drivers, renters, and unmarried drivers are most likely to see their premium rise or to receive only minor premium decreases.