Here is some good information on what happened in Massachusetts after they opened up their state to more insurance competitors. How does your state handle their automobile insurers?
New competition isn’t guaranteeing price cuts
By Todd Wallack
Globe Staff / May 15, 2012
Auto insurance rates, which tumbled after Massachusetts opened the state to more competition four years ago, are marching steadily upward again.
Many of the state’s largest auto insurers have raised rates in each of the past two years, citing the need to keep pace with the rising cost of claims for car accidents, theft, and injuries.
In addition, some companies say they could not make enough money after they dropped rates in 2008 to compete with rival insurers or to gain market share.
Quincy Mutual, for instance, raised rates by 7.5 percent last month on top of a 5.6 percent increase last year after initially cutting rates by 10 percent in 2008. Overall, its rates are 3.3 percent higher than four years ago, when the state deregulated the auto insurance industry to spur more competition.
“It’s the nature of our business,’’ said the Quincy company’s executive vice president, Kevin Meskell. “People still crash into each other and people still go to the hospital and the associated costs with those have not been decreasing.’’
Overall, major insurers have raised rates by a median of 4.3 percent so far this year after a median increase of 4.5 percent last year, outpacing the overall rate of inflation, according to a Globe analysis of data collected by the Massachusetts Association of Insurance Agents, a trade group.
Inflation rose 2.7 percent in the Boston area last year, according to the US Labor Department.
Rates could increase further this year, because insurers sometimes raise them multiple times during the course of a year. The increases could also hit some customers harder than others, depending on driving history, where they live, and other factors, agents said.
Rates charged by most major insurers are higher than they were prior to deregulation four years ago, according to Massachusetts Attorney General Martha Coakley’s office. Coakley has filed objections with state insurance regulators to the “widespread increases’’ in auto rates.
Her office found that Travelers (which also does business as Premier) has raised rates by more than 30 percent since January 2009, while Liberty Mutual and Plymouth Rock have raised rates by 18 percent. Commerce, the state’s largest auto insurer, and Progressive, a newer player in the market, have each raised rates by 16 percent.
The rate increases are averages, so some customers could see their rates go up even more sharply, while others might not see their bills increase at all.
In a letter to Insurance Commissioner Joseph G. Murphy last month, Coakley’s office said it was concerned that the Division of Insurance was approving rate increases without forcing insurers to fully explain and justify them.
“The substantial increase in rates over the past two years is troubling,’’ wrote Glenn Kaplan, an assistant attorney general. “But we are also concerned about the review of these rate increases, both from a technical and process perspective.’’Continued……
