Wednesday, 5 September 2007
A New Auto Insurance System For Massachusetts
The nation’s leading auto insurance companies such as State Farm, Allstate, and GEICO, haven’t done business in Massachusetts over a decade. They’ve stayed out of the state because they are worried they wouldn’t be able to sustain business amidst the heavy insurance regulations.
But all that might change with a new auto insurance system proposed by the state’s insurance commissioner, Nonnie S. Burnes. In her system, insurance companies will be able to set their own rates. Currently, Massachusetts is the only state in the country where state regulators set rates. But under Burnes’ proposal, insurers will not be able to set rates based on some factors such as the driver’s job or if they own a home. They also will be unable to use credit scores for one year, reported the Boston Globe.
“Governor [Deval] Patrick and Commissioner Burnes have created a framework in which insurers at last have the ability to deliver competitive pricing and product innovation that Massachusetts consumers have long deserved, without sacrificing the necessary consumer protections and subsidies,” said an official statement.
The proposal may court some insurance companies back into the state, such as State Farm. But many insurers still want to be able to use personal profiles to determine rates.
“Some of the more socioeconomic factors give more of a picture of the driver. If you’re able to pay your bills on time, there is a correlation between those things and how likely you are to file a claim,” said State Farm spokesperson, Karen Faggello.
This month, the proposal will go into two committees in the state House for approval.
“What we’re trying to do here is structure a market that’s good for consumers,” said Burnes. “We have to give the companies some mechanism for offering choice.”
Technorati Tags: auto insurance Massachusetts auto insurance
