Auto Insurance: All Quiet On The Eastern Front

In April of 2008, the state of Massachusetts introduced its drivers and auto insurance providers to a new system of “managed competition.” Now, at the end of August 2008, there seem to be few issues with the system. Motorists and auto insurance providers alike remain quiet. For Massachusetts Insurance Commissioner Nonnie S. Burnes, no news is, it appears, good news.

The new system, first implemented in April 2008, subjects Massachusetts auto insurance providers to a limited sort of regulation, wherein the Massachusetts Insurance Commissioner examines the rates auto insurance companies are charging their customers. Burnes’s office decides if the rates charged by the insurers are fair and non-discriminatory. Once the rates pass the Insurance Commissioner’s office, the insurance providers can freely subject their policyholders to these rates.

The previous system was considerably more tightly regulated. The Massachusetts Insurance Commissioner has promised the state’s approximately 4 million motorists that the new, less regulated system would result in lower rates. As of yet, there is not enough information to determine if those promises have become a reality.

In general, there have been few complaints about Massachusetts’s decreased regulation of auto insurance providers. The only dissent has come from smaller insurance providers, who are just trying to break into the Massachusetts auto insurance market.

For example, the Arbella Insurance Group and the Massachusetts Association of Insurance Agents have taken the Insurance Commissioner’s office to court. These groups claim that the “deregulation” has made it harder for insurance companies who have only recently entered Massachusetts markets.

Attorney General Martha M. Coakley thinks it’s too early yet to determine whether the new system has yielded a positive or negative outcome for the state’s drivers and economy. “I think it’s become a little more complicated than anybody thought or hoped,” Coakley told the press earlier today.

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