December 15, 2006
Nicole St. Peter
Auto Insurance Rates Drop By 11.7%
Insurance Commissioner Julianne M. Bowler today announced the decision in the 2007 private passenger insurance rate case that results in a statewide average rate decrease of 11.7% next year 1. The new rate takes effect April 1st and translates to an average decrease of $119.61 per vehicle and a statewide average annual rate of $898.81 2.
Governor Mitt Romney praised the decision, which marks the third consecutive year that rates have been cut during his term. This year's rate cut saves Massachusetts drivers 479 million dollars and is the largest rate decrease since 1978.
"This is welcome relief for Massachusetts drivers. Bringing rates down helps alleviate the high cost of living. I believe we can do even more along these lines if we commit ourselves to reforming the system to make it more competitive, which will lead to even greater rate deductions and savings," said Romney.
"The Massachusetts consumer is the real winner today," said Janice S. Tatarka, Director of Consumer Affairs & Business Regulation, whose office oversees the DOI. "I want to thank the communities that have made it their mission to crack down on auto insurance fraud in their cities and towns. These efforts have largely contributed to the rate deductions drivers state-wide are enjoying today."
"Today's decision reflects the continued trend of claims decreases, both in Massachusetts and nationally," said. Bowler. While this rate decrease is good news for Massachusetts drivers, it is no long-term solution to the problems that plague our system. Our analysis of the 2007 rate case resulted in a substantial rate decrease for consumers as well as an appropriate and adequate rate for those insurers who still write insurance in the Massachusetts private passenger insurance market."
As a result of enactment of Chapter 213 of the Acts of 2004, the rate approved by the Commissioner today will be effective April 1, 2007 instead of the normal January 1 start date. The new law allows insurers to have time to calculate the rates resulting from today's decision so that April bills will include the new rate approved by the Commissioner and reduce insurer expenses associated with provisional billing.
1 The statewide average rate increase or decrease authorized by the Commissioner is based on the existing rate at the time insurers make their rate request, typically in August of each year ($1,018.42 as of 8/11/06).
2 It should be clarified for your audience that the average statewide rate does not necessarily reflect what any one policyholder will pay for premium in 2007. Actual premium is dependent on the types of coverages and deductibles chosen, number and types of vehicles insured, SDIP records and driver classifications, territorial assignment and any discounts applied.