Massachusetts’ Division of Insurance recently said that auto insurance costs in the state have fallen significantly more than a year after the government ceased setting rates.
A state study revealed that in a one-year period from April 2008 to April of this year, car insurance rates fell 8.2 percent. The decline was 5.2 percent from 2006 to 2007. In April of last year, the state government allowed insurance providers to set their own rates. Officials described the move as a “managed competition” plan.
The state government regulated insurance rates before deciding to let open competition bring down rates. By allowing companies to set their own rates, the state expects the cost of auto insurance to go down considerably because of competition.
As a result, nine new insurance companies have entered the Massachusetts market, including two of the nation’s largest providers. With the more relaxed regulations, the state expects more companies to put up shop and give consumers more options for their insurance needs.
Jason Lefferts, a spokesperson for the state’s insurance division, points out that because of the new policy, the number of uninsured cars fell and fewer drivers were considered high-risk. He credits the developments on the success of the managed competition program.
Lefferts also said that the findings challenge majority of the criticism the division received regarding the managed competition. Several advocacy groups have openly criticized the program, saying that it is allegedly ineffective and that the state is taking a huge risk by deregulating insurance rates.
More critics expressed outrage over the timing of the division’s report. The state’s division of insurance posted a one-page summary of its findings online and failed to release the full report. Concerned citizens and consumer groups are also perplexed by the untimely release of the report – 4:30 in the afternoon on the eve of the Fourth of July Weekend Holiday.
Deirdre Cummings, the legislative director for the Massachusetts Public Interest Research Group, says that the time and nature of the release is troubling. He adds that the division of insurance has failed to present any substantial information regarding the average cost that drivers pay for insurance and how many motorists have switched to newer insurance providers.
Cummings and his group are vocal critics of the managed competition program. They accuse the division of intentionally delaying the release of information to drum up support for the said program.