Insurance Deregulation Judged with Harsh Criticisms


As Massachusetts’s auto insurance experiment reaches its second year mark since it was imposed, more and more criticisms about the policy change are being made. The most recent and biting criticism came from consumer watchdog and insurance expert Attorney General Martha Coakley, as she launched an intense attack on Massachusetts’s deregulated car insurance system.

Insurance Deregulation Judged with Harsh CriticismsAccording to Attorney General Coakley, the new system failed keeping up with the promises it made almost two years ago when it was implemented, it was not able to yield more affordable rates for consumers and make insurers provide better benefits and improved services. Included in this list of complaints made by Coakley is the use of insignificant, non-driving-record related information in computing premium rates, drivers not receiving discounts that they are entitled to, and insurance providers not being transparent enough to customers. However, the most cutting insulting made was that “managed competition” started by Governor Deval Patrick did not produce cost savings, but instead resulted to insurance companies actually increasing rates.

In response to Coakley’s aggressive responses, Consumer Affairs and Business Regulation Undersecretary Barbara Anthony said that there are a few errors in Coakley’s interpretation and analysis of rates and that she would have to respectfully disagree with Coakley’s point-by-point attacks on deregulation. Anthony reports that only after 12 months since the managed competition policy was implemented; premium rates went down by 8.2% and the Massachusetts car insurance market flourished as new insurers jumped, making the state a home for approximately 11 new insurance companies.

Moreover, Boston’s Liberty Mutual Insurance chief executive Ted Kelly said that Atty. Coakley’s statements were flawed, claiming that some points presented by Coakley were one sided and it ignored a number of demonstrable benefits that came as a result of deregulation.

Meanwhile, it seems that Coakley is standing firm with her criticisms. She mentioned in a recent interview that she is only thinking about the general welfare of consumers. Coakley expressed her worry that in contrary to promises made by this legislative act, consumers may not be able to receive the best rates and quality protection that they should be getting.

However, when asked to clarify if she still supports insurance deregulation, Coakley said that she is still supporting this new system, but expects it to improve and come up with positive changes.

Experts said that while Coakley’s press release was very strong, studded with criticism and barely having positive comments, it may turn out to produce better results as now state officials will be forced to respond immediately on the issue.