Patrick-Murray Administration's Reforms of Auto Insurance Lead to Most Affordable Rates in the Country
Massachusetts rates are lowest compared to median income, according to study by national insurance comparison company
The InsWeb index is based on a state's median auto insurance rates as part of the median state income. The lower the "affordability factor," the less of a family's budget is devoted to car insurance. The study found the Massachusetts affordability index to be 1.84 percent. The runner-up state was New Hampshire, with an index number of 2.23 percent.
In April 2008, the Division of Insurance eliminated the fix-and-establish system of auto insurance, where the Commissioner set auto insurance rates. Managed competition was established, giving auto insurers the ability to set their own prices, and compete for consumers' business.
According to a Division of Insurance study, in the first year of managed competition drivers saved an estimated $270 million on premiums. Companies are working harder for drivers' business by offering more and steeper discounts, and lowering rates. Since April 2008, 11 new companies entered the market (there were 19 remaining at that point) including three of the four largest auto insurers in the country - AllState, GEICO and Progressive.
"Managed competition has proven to be a success for drivers across the Commonwealth, and this report is more evidence that families are saving money on car insurance," said Joseph G. Murphy, the Commissioner of the Division of Insurance. "We continue to urge drivers to shop around for insurance, knowing that researching options can save even more for good drivers."
InsWeb is a publicly-traded company based in California, and is an online insurance comparison provider. The 2010 Car Insurance Affordability Index was announced by company on June 16. The top five states were: Massachusetts (1.84 percent), New Hampshire (2.23 percent), Vermont (2.39 percent), Minnesota (2.39 percent), and Utah and Nebraska (2.43 percent).