auto insurance

Massachusetts Managed Competition System Program Assessed

In April 2008, the state government put a managed competition system in place through the Division of Insurance. After some time, the system still continues to receive mixed reviews.

Before the system, state government set the rates for auto insurance effectively regulating insurance providers’ ability to raise rates to gain more revenue. When the plan was first introduced, advocates believed the new system would bring in new carriers and those that opposed said the system would discriminate against select drivers.

The system is now in its second year but there have only been minor changes in the nature of the auto insurance market.

Three major auto insurance providers Allstate, Geico, and Progressive, have entered the market. 6 more small local providers have also joined since the market change. The difference between the larger and smaller providers is that the smaller ones have employed the services of local insurance agents.

It is a concern that with large providers not seeking help from local agents, agents will suffer. Frank Mancini, president and CEO of the Massachusetts Association of Insurance Agents, says that even with some consumers switching to the bigger providers, agents have yet to suffer substantial losses. Independent agents handle up to 78 percent of auto insurance policies in the state. The national figures are much lower, 30 to 35 percent.

The statistics from the first year of operation under the new system show that the average auto insurance cost dropped. With the new system being a hot topic for debate, critics and advocates will surely being watching the market closely.

Woman From Seabrook Faces Charges From Insurance Fraud

Anna Keegan allegedly  exaggerated several insurance claims and was fraudulently collecting lost wages.  She was charged with several instances of auto insurance fraud.  The Massachusetts Insurance Fraud Bureau investigated her various claims, and discovered that she legitimately had injuries from a dog-bite, but attempted to embellish her claims the next year from injuries from an auto accident and lost wages from a non-existent job.  She plead not guilty, and was released on personal recognizance.  

For decades, Massachusetts set all auto insurance rates and barred any carrier to have competitive rates.  This was quite pricey for those with clean records.  Last spring, the state changed these regulations, and allowed carriers to present competitive rates.  With this change, Massachusetts residents are shopping around for the best deal in auto insurance and have ore of an incentive to drive safer and find the best option for them.   

New insurance rules putting agents out of work?

The Boston Globe is reporting on the frustration of agents who specialize in high-risk drivers over the new rules effective April 1 which will, they say, cost them their jobs.  The agents also fear that the new rules will leave many drivers without coverage.  Insurance Commissioner Burnes countered with graphical evidence that there was a distribution of agents across the state who are not being picked up by insurance companies.

Newcomers versus legacy carriers in Massachusetts auto insurance marketplace

Competition has certainly changed the playing field in the world of Massachusetts Auto Insurance.  Although insurance agents continue to provide value to consumers, the increased competition is not desirable for Massachusetts insurance agents because it will change the playing field dramatically for Massachusetts Auto Insurance.  One situation with a group of Massachusetts Auto Insurance agents and Massachusetts Insurance Commissioner Nonnie S. Burnes, alleges preferential treatment for newcomers to the Massachusetts Auto Insurance marketplace.

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