GOVERNOR PATRICK SIGNS LEGISLATION ENDING NEW AUTO INSURERS' TWO-YEAR EXEMPTION FROM RESIDUAL MARKET
Law will strengthen residual market options for consumers, maintain group marketing discounts for consumers
Yesterday, Governor Patrick signed into law legislation that ends the two-year exemption from the residual auto insurance market for new entrants.
(Photo Credit: Holland Hinman/Governor's Office)
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BOSTON - Thursday, August 5, 2010 - Governor Deval Patrick yesterday signed into law legislation that ends the two-year exemption from the residual auto insurance market for new entrants, further strengthening the residual market for consumers in Massachusetts and continuing the momentum of the Administration's successful reform of auto insurance.
"Since we first brought managed competition to the Commonwealth in April 2008, 11 new companies have come to Massachusetts and drivers have saved hundreds of millions of dollars on their policies," said Governor Patrick. "This legislation continues to move us forward as we create a marketplace that always aims to put the customer first."
"Building on our Administration's auto insurance reform, this bill provides more competitive and fair options for Massachusetts drivers," said Lieutenant Governor Timothy Murray. "By implementing managed competition, we are not only offering a consumer friendly marketplace in the state, but this reform is also attracting insurance companies to grow and expand in Massachusetts."
When managed competition took effect in 2008, companies entering the marketplace were given a two-year window during which they did not have to participate in the residual market. The residual market is open to drivers who unable to get an insurance policy directly through a carrier in the voluntary market. Companies who enter the marketplace before January 1, 2011, will be able to maintain that exemption, as well as companies who have entered Massachusetts since 2008 and still have time remaining on their exemptions.
Since the creation of managed competition, 11 new companies have come into Massachusetts, increasing the total number of auto insurance carriers to 30. Included in the new companies are three of the four biggest auto insurers in the country, GEICO, Progressive and Allstate. These new carriers have enhanced the consumer marketplace by offering lower rates, more discounts and additional benefits for those looking to purchase auto insurance.
In calendar years 2008 and 2009, drivers saved a total of $477 million on their premiums compared to 2007. One of the discounts drivers have enjoyed since the start of managed competition is through group marketing plans, which allows large groups of drivers to reap the benefits of purchasing power and negotiate lower premiums. The approval of group marketing plans was set to sunset in 2010, and the legislation signed by the Governor today extends the plans to 2015.
Along with creating a better marketplace for consumers, managed competition has created hundreds of jobs in the Commonwealth. Liberty Mutual is in the process of hiring 300 new employees in Western Massachusetts; Peerless added 60 appraiser positions and is hiring 40 more Massachusetts-based employees this year; and Progressive has hired 140 new employees in the Boston area and Western Massachusetts.
For more information on the benefits of managed competition in the Commonwealth click here.