Good drivers pay for high-risk drivers

BOSTON -- The feud over overhauling Massachusetts’ auto insurance system that has played out in dueling TV and radio ads for months may move to the State House as soon as this week.

On one side is Fairness for Good Drivers, a group including local and national insurance companies such as Liberty Mutual Insurance of Boston and MetLife, that want less regulation and more competition in Massachusetts’ auto insurance market.

They are behind the commercials declaring "good drivers pay more for auto insurance so bad drivers can pay less." The ads (which are no longer airing) featured Massachusetts drivers declaring the current system -- which is highly regulated and limits variety in pricing between customers -- is "not fair."

On the other side of the auto insurance feud is the Massachusetts Coalition for Affordable Auto Insurance for All, which includes Commerce Insurance Co. of Webster, Arbella Mutual Insurance of Quincy and some independent insurance agents.

The Coalition until recently ran TV and radio commercials with New Jersey drivers warning that auto reforms in their state, similar to changes proposed at the State House, jacked up their rates. The Garden State drivers said their insurance coverage was affected by factors including whether the driver carried a credit card balance or parked on the street.

Fairness wants Massachusetts’ current rate-setting system changed; the Coalition does not.

Gov. Mitt Romney last year proposed doing away with the state’s unique auto insurance setup, where state regulators set the rates insurers charge. The idea is to draw more big national insurance companies that now refuse to do business here and thus lower prices through competition.

Yet the Coalition argues Romney’s bill could translate to higher costs for drivers besides so-called bad drivers, and lead people to drop their insurance coverage and thus increase premiums for other drivers.

The Legislature’s joint Financial Services Committee is under a deadline to act on Romney’s bill by June 15.

Committee House Chairman state Rep. Ronald Mariano, D-Quincy, last week said he is working on a modified version of Romney’s bill, and hopes to release it before the end of May.

Yet it is not clear what kind of reception Mariano’s bill will receive.

Committee Senate Chairman state Sen. Andrea Nuciforo, R-Pittsfield, has voiced concerns about competitive rate setting.

Mariano is not looking to do exactly what the governor proposed or what Fairness wants, though they’re all, generally, looking to open up the auto insurance market in Massachusetts and change the current system for apportioning high-risk drivers.