Insurers Amend Rates; Competition Drives Premiums down
Commissioner continues stringent review process, plans to launch consumer initiatives
"Not only are we seeing companies adjust their rates downward even more, we are also seeing them improve their array of policy offerings to stay ahead of their competitors," said Insurance Commissioner Nonnie S. Burnes. "The promise of better rates for good drivers and better products for everyone is coming to fruition in the Massachusetts auto insurance market and consumers will start to experience these benefits firsthand when they begin to shop around this winter."
The average reduction across 19 companies for policies effective in April 2008 is -7.8%. It is important to note that right now any calculation of an average premium decrease is preliminary. When drivers realize the benefits of managed competition early next year they will shop around and choose lower-priced carriers. This will undoubtedly impact existing market share among insurers, meaning that those insurers with lower rates should see an increase in their business. This shift will drive down the statewide average rate even further.
"The Division will continue its thorough review process to ensure that companies are abiding by the new rules and adhering to the system's extensive consumer protections," said Burnes. "I take my role as a consumer advocate very seriously. We will be closely scrutinizing the amended filings to make certain that consumers across our state are being treated fairly."
The Commissioner's rate review period can extend to 45 days. The Division will be examining each company filing to determine whether insurers are, as required, using driving record and experience for primary rating factors, refraining from drawing on banned socioeconomic factors, including education, homeownership and credit information, for rating and underwriting purposes and that the final rates are actuarially sound. The second round of rate filings for policies with effective dates on or after May 1, 2008 can occur anytime after February 15, 2008.
"Drivers who have policies with April effective dates can expect to receive their renewal notices in the mail - and, if they are good drivers, news of lower rates - by mid-February," said Burnes. "The Division will launch a website during this period to help jumpstart comparison shopping among the state's auto insurers. We want consumers to be able to go to a central, trusted location so that they can make informed choices about the prices and policies that work best for them."
In addition to the new consumer website, the Commissioner and the Division will be conducting regional outreach among consumers, agents, legislators and other interested parties in an effort to offer information and guidance about managed competition's new rules, inherent benefits and available resources. Several statewide consumer forums will be held in the coming weeks and months, timed to coincide with the staggered issuance of renewal notices and policy effective dates. "We want to get word out to consumers in every corner of the state about the exciting opportunity they now have to take advantage of competitive rates and innovative policies," said Burnes.