Mass. Gov. Vows Action on Auto:

Gov. Mitt Romney vowed to introduce a plan to introduce competitive rating and modify the subsidies good drivers now pay in the Massachusetts auto system. Romney said his plan would include changes to the residual market Commonwealth Auto Reinsurers (CAR) and how it spreads the of high risk drivers among insurers, as well as elimination or reduction in the step rating subsidies that good and experienced drivers pay. The Romney plan was contained in a letter from Beth Lindstrom, secretary of consumer affair and business regulation, whose office oversees the Division of Insurance where Commissioner Julianne Bowler has been working on recommendations for months. The recommendations include: reforming CAR rules; finding ways to reduce the subsidy that good or experienced drivers pay to insure the very worst or inexperienced drivers; and opening the system to competitive products and rates. This latter process should be “carefully developed so that classes and territories of consumers are not unreasonably affected” and might include a phase-in period, rate caps and limited flex bands on rating. Romney wants a special task force to draft any necessary legislation, although several of his recommendations can be done through regulation. The Property Casualty Insurers Association of America (PCI) welcomed Romney’s efforts. Frank O’Brien, PCI’s New England regional manager, maintained that change is not that difficult, based on what’s happened in other states like South Carolina. “When South Carolina made drastic changes in the late 1990s, the number of insurers doing business in the state increased dramatically, the large number of drivers insured by the state’s high-risk pool virtually evaporated, and the premiums for consumers decreased. We urge the administration to proceed without delay in making the changes that will bring those kinds of benefits to Massachusetts,” O’Bien said.