PCI Says Competition Only Solution to Mass. Auto Dilemma

The Property Casualty Insurers Association of America has recommenced its attack on the restrictive Massachusetts auto market, noting that just as the number of companies writing private passenger auto insurance in the state has continued to decline in recent years, now the number of companies offering discounts to good drivers also continues to fall.

PCI New England Regional Manager Frank O’Brien said the insurance companies aren’t the ones to blame. “As we’ve been saying for what seems like an eternity, unless insurers have the opportunity to compete in an environment that doesn’t set artificially low rates, the people of Massachusetts will continue to see fewer insurers and fewer discounts – discounts that are common to good customers in other states,” he indicated.

“The auto insurance system is under tremendous stress as regulators and legislators continue to cling to the archaic notion that insurance companies will want to participate in the only state in the nation that sets all auto rates and forces companies to subsidize the residual market which provides coverage for the highest risk drivers in the state,” O’Brien continued. “Reform of the residual market is an absolute priority, which PCI will continue to strive for in 2004.”

The bulletin again reminded the public that “only 19 companies now offer auto insurance in Massachusetts, compared to 200-300 companies in many states. The number of companies has dropped by one-third since 1999. Only three of the companies have announced plans to offer discounts to good drivers this year, and two of those have lowered the discounts from last year.”

Where once New Jersey was routinely excoriated as the “poster child” for all that can go wrong with auto insurance, the state is now being hailed as the harbinger of a new era following passage of an auto reform bill last June. Massachusetts has become the new focus for the collective ire of many insurance associations.

“We find it interesting that the Attorney General’s office is calling for reform to provide an incentive for insurers to operate here, while, at the same time, fighting against badly needed rate increases,” O’Brien continued. “We urge public policymakers to look at New Jersey and see how auto reform has stimulated the market there in a very short period of time. Massachusetts’ system is badly in need of major surgery, not just a face-lift.”

Hopefully the surgery won’t result in an increase in med-mal claims.