Editor’s Note: Promises to keep

p:Deregulation is breaking out all over, with Democrats spearheading the changes and making the promises of a better insurance future.

Most recent is the Spitzer administration’s move to deregulate workers’ compensation pricing in New York.

“This will result in greater transparency in the rate-making process, increased price competition and lower premiums for employers because it will drive carriers to achieve greater efficiency. Fostering competition will also make the state more attractive to new insurers,” New York Superintendent Eric R. Dinallo said in announcing the policy shift in language a free market Republican could have penned.

Dinallo wants to curtail the activities of the industry’s rating bureau and hand insurers more control over their own pricing.

That’s the same message emanating from Massachusetts where this summer Insurance Commissioner Nonnie Burnes stunned the industry and fellow officials by declaring her intent to introduce competition into the state’s private passenger auto market. This is something Republican administrations have talked about for decades but never achieved. Perhaps it took a governor, Democrat Deval Patrick, whom a Democrat-controlled legislature could trust or at least not vigorously oppose, to give competition try.

The transition in Massachusetts is not done by any means and not everyone is on board the competition train. But the Patrick administration has already driven the debate further than it has gone in a long time.

There are 19 insurers writing in the Massachusetts private passenger market. More than 60 percent of the business is written by companies that write either exclusively or primarily in Massachusetts. Burnes says four insurers have already signaled they will enter the market if her plan to allow competitive pricing goes forward.

Perhaps the blame or credit for the deregulation frenzy goes to New Jersey, which deregulated its auto market in June 2003. Since then several insurers have entered the state.

Burnes says she has spoken with officials from New Jersey and other states where auto insurance has been deregulated. But she wisely cautions that other states “started in a very different place” from where Massachusetts begins its transition.

Burnes is convinced that rates for all and for good drivers in particular will go down after her plan is in place. That’s a likely scenario given that statistics suggest rates would likely be going down for all drivers even if the state continued to set them.

However, it may be worth noting that Florida officials promised homeowners major insurance savings after enacting legislation this year that among other things provided property insurers with access to cheaper reinsurance. Now insurers in Florida are filing new homeowners rates but many of these rates do not reflect the big savings that politicians promised. So the industry is taking a beating, politicians are feeling the heat, and homeowners are frustrated and disappointed.

It can be risky promising how a private marketplace with its own set of promises to keep will act once its restrictions are lifted.