New year brings lowered rates for Mass. drivers
Private passenger auto insurance rates will be cut an average 8.7 percent in Massachusetts in 2006 under a ruling by insurance commissioner Julianne M. Bowler.
The new rates translate to an average decrease of $95.14 per vehicle and a statewide average annual rate of $994.862. The rate cut saves Massachusetts drivers $380.3, the largest rate decrease in more than 25 years.
Property and personal injury losses fell by more than $237 million between 2003 and 2004. The DOI estimates that fraud fighting efforts by the City of Lawrence and insurers yielded approximately $20 million in reduced losses.
The reduction, much more than the 0.1 percent cut recommended by insurers, fell short of the 18 percent decrease advocated by attorney general Tom Reilly.
Bowler approved a negative 0.8 percent profit allowance for the insurers, which is slightly less than was allowed for profits in 2005. The insurers were seeking a +3.8 percent profit allowance.
A 1.5 percent average increase in agent commissions was approved, raising the average commission per vehicle from $119.50 in 2005 to $121.34 for 2006.
Gov. Romney comment
Bowler’s boss, Gov. Mitt Romney, an advocate for uniform rate change, welcomed the decision, but maintained that consumers would fare better with a system under which insurers were free to set their own rates.
“This is a well-deserved present for the drivers in the Commonwealth. It’s an appropriate and substantial level of rate relief. However, we cannot lose sight of the fact that a rate decrease is no long-term answer to the problems that plague this system. To give the majority of our drivers real choices and the true rate relief they deserve, we need to move to a more competitive market of the type that exists in every other state in the nation,” Romney maintained.
An insurers group, which along with Romney has been trying to change the state’s uniform rate system, used the announcement as an opportunity to press the case for change.
“If Massachusetts had a competitive rating system most auto insurance consumers would have saved money on their policies already,” stated James T. Harrington, executive director of The Massachusetts Insurance Federation and spokesman for the Fairness for Good Drivers Coalition.
“The annual process where the state sets auto insurance rates deprives Massachusetts drivers from the savings they could have had all along with a competitive system. Instead every year Massachusetts drivers wait for months for a rate announcement and decision by the government,” Harrington claimed.
Insurance companies have the right to appeal but have not yet indicated if they will.
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