December 29, 1998
(617) 521-7333

Division Of Insurance Announces 1999 Personal Auto Insurance Rate

(BOSTON, MA)Massachusetts Insurance Commissioner Linda L. Ruthardt today rejected the automobile insurance industry's request for a 15.5 percent increase in personal auto insurance rates for 1999. The Automobile Insurance Bureau (AIB) filed the request with the Division of Insurance in August.

Following four straight years of insurance rate reductions for private passenger automobiles, Commissioner Ruthardt ordered a less than 1% increase - (+0.7%) -- in the rate policyholders will pay in 1999. As a result, the average projected annual premium will rise $5.50 per auto. Those who buy only the mandatory coverages will see an average decrease of about $14, or -3.1%.

The announced rate for 1999 includes the last portion of a credit from a 1996 Safe Driver Insurance Plan (SDIP) re-calculation that resulted in a $176 million dollar refund to consumers. 80 percent of that refund was factored into rate reductions for 1997 and 1998, and the remaining 20 percent will be returned to consumers in 1999.

The order includes an approximate $7 million reduction in premium for Personal Injury coverage (PART 2) and Basic Property Damage (PART 4) as a result of the industry's failure to show adequate cost containment efforts by the insurers.

Also, as a part of the 1999 rate decision, Commissioner Ruthardt ordered a $3,000,000 sanction against the insurers. The sanction addressed the AIB's incomplete compliance with a discovery order concerning the expense portion of the case.

In a stipulated settlement reached in late December by the parties in the rate case, the Massachusetts Association of Insurance Agents (MAIA) agreed to a one percent increase in commissions for 1999. The projected average commission per policy in the coming year will rise from $108.38 to $109.50. MAIA had requested an 11 percent increase in commissions on top of the AIB's 15.5 percent rate increase recommendation.

A separate memorandum detailing the basis for the decision is anticipated soon. Copies of the December 29, 1998 Memorandum and Order can be obtained by contacting the Massachusetts Division of Insurance at (617) 521-7333.