Posted on 03 Apr 2009
Cost savings, a wider variety of products and services and the ability to choose from a wider range of carriers - including some of the major national insurance companies - trumpet the success of the Commonwealth's new regulatory environment for automobile insurance, according to the Property Casualty Insurers Association of America (PCI).
“With one year of managed competition under our belts, consumers have been the clear winners,” said Frank O’Brien, vice president and regional manager for PCI. “Drivers are saving money – and in today’s economy, that is a huge benefit. This approach to regulation is breathing new life into the auto insurance marketplace that had been languishing for 30 years. The entry of new insurers into the auto market and the return of those that left years ago is a sure indication of the success. Just this year, eight new auto insurers have already begun writing or will be writing coverage soon. This offers greater choice to drivers. And with prices dropping consumers are very satisfied with the results.”
Prior to the implementation of managed competition, the Massachusetts auto insurance market was the least competitive in the nation. The old regulatory system was inefficient and ineffective. It greatly restricted competition and the impractical rules forced insurers to withdraw from the state at a very rapid pace. In 1990, 53 companies provided auto coverage in Massachusetts; by 2004, this number plummeted to 19. All the while, the number of insured vehicles in the state rose 21 percent, making it even more important to have a large number of insurers that could offer drivers a variety of prices and products. By far, Massachusetts had the fewest number of auto insurance companies compared to any state in the country.
“Those days are over and Massachusetts is seeing the benefits of competition,” said O’Brien. “All available information and data point to a successful managed competition program creating a win-win scenario for drivers and insurers alike. It is encouraging to know that additional potential enhancements may be forthcoming soon to provide even more benefits for the state’s consumers.”