Massachusetts Attorney General (AG) Martha Coakley has released a report entitled Automobile Insurance: The Road Ahead, giving her take on the impact insurance deregulation has had on Massachusetts drivers. Prior to deregulation or “managed competition” begun on April 1, 2008, the AG’s office and the Division of Insurance reviewed the expenses and claims’ experience that insurers were required to submit to them and then set insurance premiums “consistently lower than that proposed by the industry – billions of dollars lower over the past twenty years.” In addition, the AG and insurance commissioner limited premium variations across territories and classes, capped charges on urban drivers, considered only variables such as the insured’s vehicle, driving behavior and garaging location, and required insurers to insure all drivers. Since managed competition, according to the Coakley report, insurers are no longer required to disclose their data; the rate ceiling has been eliminated, and caps on urban rates are being phased out; insurers reject drivers who are then randomly assigned to insurers in the residual market; and insurers consider other factors besides driving records, including prior coverage limits, payment history and the purchase of homeowners insurance. As a result, AG Coakley says, “While prices have dropped overall, consumers are paying more than they would have had the market not been deregulated.” While more insurers have entered the market, “most of the new entrants have not offered lower rates overall [and] … new insurers have not caused incumbent carriers to lower statewide prices,” Coakley said. According to the Coakley report, insurers raised their base rates by 10% at the beginning of managed competition, creating “excessive rates in an environment where insurer losses have, on average, decreased over the past several years.” Coakley speculates that Hispanics, low income consumers, the elderly and urban drivers “may” be paying increased prices and that consumers whose rates have decreased paid more than they should have. The AG accuses insurers of omitting data and information in their public filings, including key rating information, and she charges both insurers and the Automobile Insurers Bureau with “refus[ing] to make public data on claims, premiums and expenses necessary to determine whether statewide rates are fair and not excessive.” The Coakley report concludes that “the current experiment in deregulation has thus far not met its goal. Instead, managed competition has caused many drivers to be overcharged and has led to fewer consumer protections.” In light of her findings and responsibility, Coakley said, “The Attorney General’s Office intends to promulgate consumer protection regulations under her G.L. Chapter 93A Consumer Protection regulatory authority.” The Massachusetts Office of Consumer Affairs and Business Regulation (OCABR), which oversees the Division of Insurance, refuted Coakley’s report saying that since “managed competition” began, eleven more insurers have entered the Massachusetts market increasing competition and reducing rates. OCABR Undersecretary Barbara Anthony said, “Rates have decreased 8.2% on average and that’s a fact. About $270 million in premiums have been saved by consumers.” Two years ago, nineteen insurers wrote auto policies in the state. Currently, thirty insurers compete for coverage, led by Commerce Group (31%), Safety Group (11.1%), Arbella Insurance Group (9.3%), Liberty Mutual (8.5%) and MetLife Auto and Home (6.5%). Liberty Mutual Group Chairman, President and CEO Edmund Kelly called the Coakley report “flawed” and said “To better meet increased consumer demand under managed competition, we lowered our prices, added new products and improved service across the state. As a result, we have thousands of new customers and over 10% growth since ‘managed competition’ began.” Kelly said that Liberty Mutual is so committed to the new, more competitive insurance landscape in Massachusetts that it is adding 300 jobs at its Springfield, MA operations, further boosting the economic outlook for Massachusetts consumers. Consumers, he added, don’t want the government making decisions for them; “they want to choose for themselves the company they do business with – based on the quality of the product, service and price.”
My Visitors
Tuesday, January 5, 2010
MASSACHUSETTS AG BLASTS STATE’S MANAGED COMPETITION; OCABR AND INSURERS DISAGREE
Massachusetts Attorney General (AG) Martha Coakley has released a report entitled Automobile Insurance: The Road Ahead, giving her take on the impact insurance deregulation has had on Massachusetts drivers. Prior to deregulation or “managed competition” begun on April 1, 2008, the AG’s office and the Division of Insurance reviewed the expenses and claims’ experience that insurers were required to submit to them and then set insurance premiums “consistently lower than that proposed by the industry – billions of dollars lower over the past twenty years.” In addition, the AG and insurance commissioner limited premium variations across territories and classes, capped charges on urban drivers, considered only variables such as the insured’s vehicle, driving behavior and garaging location, and required insurers to insure all drivers. Since managed competition, according to the Coakley report, insurers are no longer required to disclose their data; the rate ceiling has been eliminated, and caps on urban rates are being phased out; insurers reject drivers who are then randomly assigned to insurers in the residual market; and insurers consider other factors besides driving records, including prior coverage limits, payment history and the purchase of homeowners insurance. As a result, AG Coakley says, “While prices have dropped overall, consumers are paying more than they would have had the market not been deregulated.” While more insurers have entered the market, “most of the new entrants have not offered lower rates overall [and] … new insurers have not caused incumbent carriers to lower statewide prices,” Coakley said. According to the Coakley report, insurers raised their base rates by 10% at the beginning of managed competition, creating “excessive rates in an environment where insurer losses have, on average, decreased over the past several years.” Coakley speculates that Hispanics, low income consumers, the elderly and urban drivers “may” be paying increased prices and that consumers whose rates have decreased paid more than they should have. The AG accuses insurers of omitting data and information in their public filings, including key rating information, and she charges both insurers and the Automobile Insurers Bureau with “refus[ing] to make public data on claims, premiums and expenses necessary to determine whether statewide rates are fair and not excessive.” The Coakley report concludes that “the current experiment in deregulation has thus far not met its goal. Instead, managed competition has caused many drivers to be overcharged and has led to fewer consumer protections.” In light of her findings and responsibility, Coakley said, “The Attorney General’s Office intends to promulgate consumer protection regulations under her G.L. Chapter 93A Consumer Protection regulatory authority.” The Massachusetts Office of Consumer Affairs and Business Regulation (OCABR), which oversees the Division of Insurance, refuted Coakley’s report saying that since “managed competition” began, eleven more insurers have entered the Massachusetts market increasing competition and reducing rates. OCABR Undersecretary Barbara Anthony said, “Rates have decreased 8.2% on average and that’s a fact. About $270 million in premiums have been saved by consumers.” Two years ago, nineteen insurers wrote auto policies in the state. Currently, thirty insurers compete for coverage, led by Commerce Group (31%), Safety Group (11.1%), Arbella Insurance Group (9.3%), Liberty Mutual (8.5%) and MetLife Auto and Home (6.5%). Liberty Mutual Group Chairman, President and CEO Edmund Kelly called the Coakley report “flawed” and said “To better meet increased consumer demand under managed competition, we lowered our prices, added new products and improved service across the state. As a result, we have thousands of new customers and over 10% growth since ‘managed competition’ began.” Kelly said that Liberty Mutual is so committed to the new, more competitive insurance landscape in Massachusetts that it is adding 300 jobs at its Springfield, MA operations, further boosting the economic outlook for Massachusetts consumers. Consumers, he added, don’t want the government making decisions for them; “they want to choose for themselves the company they do business with – based on the quality of the product, service and price.”
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment