Mass. Auto Insurance Fraud Crackdown Paying Off for Drivers

High-profile crackdowns on auto insurance fraud have resulted in dramatic savings for drivers in some Massachusetts communities.

The statewide average premium is scheduled to drop by nearly 12 percent on April 1, but drivers in some communities where antifraud task forces have been operating will see even greater savings, with premiums falling 24 percent in Lawrence and more than 15 percent in some Boston neighborhoods.

Drivers in Lawrence, the first Massachusetts community to target insurance fraud in 2003 following a case in which a grandmother died in what police called a staged accident, will see the average annual premium drop to $1,379 from $1,815.

In Boston’s Dorchester section, drivers will see the average premium fall to $1,670 from $2,033, a reduction of almost 18 percent.

The new rates apply to what insurance companies call experienced drivers, who represent the most common category of insured driver.

The industry’s calculations are based on a driver with six or more years of experience, a vehicle that is a couple of years old, an average driving record, and comprehensive and collision coverage with a deductible of $500.

“We’ve said that if we could take fraud out of the system, rates would come down,” said Daniel Johnston, president of the Automobile Insurers Bureau of Massachusetts. “Now we finally have proof.”

The antifraud campaign has led to charges against or the arrest of 528 people, including lawyers and chiropractors, Johnston said.

Reduced fraud has also led to a reduction in claims filed with insurers, which allows regulators to cut premiums.

In communities where fraud is less of a problem, and where the average premiums are lower, the percentage reduction coming on April 1 is also less. For example, experienced drivers in Newton will see their average premium drop 8.6 percent.

“This is exactly how the system should work, and we can lower premiums even more in the future if we apply a similar approach to reducing accidents,” said Stephen D’Amato, a consultant to the Center for Insurance Research in Cambridge.

Massachusetts is the only state where auto insurance rates are set by state regulators.

Some insurers say rates would drop even further if regulation was reduced and companies were allowed to compete for drivers’ business.

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Information from: The Boston Globe, http://www.boston.com/globe