The Massachusetts’ attorney general’s office yesterday released a report last Tuesday, December 22, a report challenging the managed competition car insurance policy that was enforced back 2007. According to this detailed report, so far the said insurance policy has failed to accomplish its goals of lowering premium rates and safeguarding the interests of motorists.
According to the sources, the only good thing that this managed competition system did for the state was to bring in a number of new insurance companies, boosting investment rates in Massachusetts’ auto insurance sector. On the other hand, this system failed to achieve its predicted outcome which is influx of new insurers. Experts said that managed competition was supposed to woo in more companies in an attempt to increase market competition, which will eventually lead to more affordable premiums and better services. However, after more than one year since it was enforced, it only brought in more insurers, but failed to achieve its ultimate goal.
The report from the attorney general’s office mentioned that this new policy even caused negative results, particularly a number of insurance providers rating their customers using socio-economic factors rather than their driving records. This report specified that motorists who are senior citizens, receive below average monthly income, and do not have a permanent resident end up paying more expensive premiums regardless of the fact that they have excellent driving records. This report also blames the state Division of Insurance for failing to prepare a comparative report that will make it more convenient and easier for motorists to look around for insurance quotes and cut back on policies.
Attorney General Martha Coakley said in a recent interview that her main concern is that consumers in the state may not get the quality of service they deserve to get. Reports say that the attorney general’s office also mentioned in the 58-page report that the situation regarding auto insurance may have gotten worse because of this new system.
Meanwhile, Office of Consumer Affairs and Business Regulation undersecretary Barbara Anthony defended the managed competition policy and stated evidences showing a significant decrease in average amount spent by a Massachusetts driver on premium payments. However, Massachusetts Insurance Federation in Boston executive director James T. Harrington expressed his doubts that Coakley’s report criticizing insurance deregulation might be an attempt to boost her chances in winning a Senate seat. Harrington said that the timing of Coakley’s statements heightened his curiosity.
At present, local motorists are waiting for an official state report that will show the effects bought upon by the managed competition policy.