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Auto-Insurance Reductions for 2008 Not As Rosy As Projected

Oct 24, 2007

By Hillary Chabot, The Sun, Lowell, Mass.

Oct. 25--BOSTON -- The first peek at reduced auto-insurance rates in the Bay State under new regulations meant to increase competition isn't pretty.

Advisory rates, for companies making up less than 1 percent of the auto-insurance market, show an average 2.5 percent reduction in auto-insurance rates next year. The cut is far less than the 10 percent reduction some insurers were projecting for 2008.

"When you see a 2.5 percent decrease, that's effectively a 7.5 percent increase," said Sen. Marc Pacheco, D-Taunton, who filed a bill yesterday meant to close loopholes in the push to increase competition.

Supporters of competition, however, urged lawmakers and drivers to wait until Nov. 19, when a large chunk of the 19 companies currently offering auto insurance will submit their rates.

"They're using (that data) as a desperate attempt to scuttle reform," said Jim Harrington, spokesman for 10 auto-insurance agencies part of the Massachusetts Insurance Federation.

"I'm confident companies are working very hard to

make sure they have competitive filings ready to go on that date," said Harrington.

Pacheco's bill, which Sen. Steve Panagiotakos signed on to, would limit auto-insurance companies to using driving records as the primary factor in setting premiums.

Panagiotakos feels the bill means the state can make a slow and steady move toward competition.

"Right now we're in uncharted waters.," Panagiotakos said. "The last time the system changed was over 30 years ago and it was a major problem. You want competition, but you want to make sure it's controlled enough so it doesn't cause great rate hikes for those down the road."


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Copyright (c) 2007, The Sun, Lowell, Mass.

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