Massachusetts Works to Install Competitive Auto Insurance Market #insurance #brokers

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Massachusetts Works to Install Competitive Auto Insurance Market

With the highest auto insurance claim rate in the U.S. the state of Massachusetts is hard at work trying to replace its currently overregulated market with a new system in which insurance companies establish their own competitive rates based on driving records.

This effort, long overdue in the eyes of many Massachusetts drivers, would remove the state government’s current rate-setting authority, allowing insurance companies to set rates instead, and usher in a competitive consumer marketplace.

These changes seem a necessity for the state with the fourth-highest auto insurance rates in the nation.

Sharing the Loss

Massachusetts currently allows drivers to purchase their car insurance from any state-licensed insurer. However, all auto insurance companies must share the losses associated with high-risk drivers, who keep state-mandated rates high. The more market share an insurer holds the more financial risk it must carry. This places an unfair burden on some of the state’s largest insurers, which ultimately pass it along to Massachusetts drivers even those with clean driving records.

Under a reformed system, consumers could shop around for the best coverage and prices, choosing their own auto insurers. This is a major step toward free enterprise in the Massachusetts auto insurance marketplace, and would encourage auto insurance companies to offer competitive prices; help some of the state’s best drivers tailor coverage to their needs and get the low rates they deserve; and give high-risk drivers incentive to improve accident and claims rates and take personal responsibility for their actions behind the wheel.

A reduction in insurance costs due to fraud is also a by-product of a reformed Massachusetts auto insurance system. Auto insurers, now individually responsible for these costs, would become much more careful about who they offered coverage to and how they investigated suspected fraudulent claims. Once again, the end result would be lowered costs for Massachusetts’ best drivers.

Change on the Way

As the Massachusetts auto industry heads toward reduced state regulation; rates reflective of actual driving records; more consumer choices and greater consumer responsibility, consumers stand poised to enjoy these competitive marketplace benefits. Although auto insurance reform carries much change, the sentiment of most Massachusetts drivers, long forced to pay exorbitant auto insurance rates, echoes to the world, “Bring it on!”





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