Massachusetts auto insurance rates

By Rebecca Deusser Sentinel & Enterprise Statehouse Bureau



BOSTON -- Drivers in Lunenburg paid $86.59 more for auto insurance last year than they should have, compensating for drivers in Lowell, Lawrence and Dorchester who paid $24.86, $916.48 and $1,328.60 less than they should have, respectively, according to the Automobile Insurers Bureau of Massachusetts.

Critics of the state's auto insurance system say a statewide mandate for insurance has inadvertently pushed up the cost of premiums.

And some people on Beacon Hill say Massachusetts drivers are paying too much for car insurance.

The state ranked fourth in the country for car insurance rates, an annual average of $1,051.60, in 2003, and officials suspect rampant insurance fraud exists in several of its major cities.

Decades ago, lawmakers voted to use subsidies to make required insurance plans affordable, and for some communities, those costs have added up.

Typically a driver pays more for car insurance for living in a city, rather than a rural area.

But Peter Robertson, a spokesman for the Fairness for Good Drivers Coalition, said a suburban zip code does not ensure lower auto insurance rates; rather, it helps ease the high cost of city driving.

"The rates are not as high as they would be (for city drivers) if they were based on pure costs," Robertson said. "Because of our system, these subsidies mean people in the most rural areas pay more than they should, so city and young drivers don't have to pay as much."

Gov. Mitt Romney, who proposed a dramatic overhaul to the system last fall, said state restrictions have driven insurance companies and competition out, pushing premiums sky-high.

Others say recent changes, including an insurance rate cut of 8.7 percent, have already saved taxpayers money, and that little reform is necessary.

Massachusetts Insurance Commissioner, Julianne Bowler "set the table" for car insurance reform last year by cutting premium rates and changing the state's "step" system to a point system to rate a person's driving record, said Division of Insurance spokesman Chris Goetcheus.

The new rating system penalizes experienced drivers less for driving infractions, such as speeding tickets or minor at-fault accidents, but it also sticks young drivers with a "hefty surcharge" for similar offenses, Goetcheus said.

He said drivers should start to see savings this year.

But drivers in communities like Leominster and Fitchburg are expected to pay more for car insurance than they would under a system less dependent on subsidies.

Jim Harrington, also a spokesman for the Fairness for Good Drivers Coalition, said a top culprit for those prices is insurance fraud.

City officials in Lawrence started to crack down on fraud in 2002, after a woman died in a staged car accident to collect insurance money.

In 2002, there were 141 injuries per 100 vehicle accidents in Lawrence, but in 2004, the number dropped to 60 injuries, Harrington said.

"That was about $30 million in savings to the system," Harrington said. "If we commit the same type of resources to fight fraud like we did in Lawrence, it could dramatically take fraud out of the system."

Harrington supports Romney's proposals to change how insurance rates are set and allow companies to use "assigned risk," allowing them to factor in all sorts of criteria to determine who is a bad driver.

Some insurance companies already operating in Massachusetts, including Arbella and Commerce Insurance, oppose assigned risk, saying the state should not change its rules to accommodate large, national companies, said Doug Bailey, spokesman for the Massachusetts Coalition for Affordable Auto Insurance for All.

The governor's bill calls for competitive rating, in which companies would submit rates to the state for approval, instead of continuing to allow the state Insurance Commissioner to set the rate herself.

Harrington said those changes will make the state more friendly to national insurance companies that have stayed away to avoid home rules.

Few disagree that a key reason why insurance rates are high in Massachusetts is because it fosters a culture of bad driving.

"We have here bad weather, aggressive drivers, unfriendly attitudes, a high concentration of trial lawyers and chiropractors, congested streets and a propensity to sue," said state Sen. Andrea Nuciforo Jr., D-Pittsfield. "Given those things, we shouldn't expect to pay rates like those in Iowa."