Divison of Insurance… What Does it Do?

The Massachusetts Division of Insurance serves the people of Massachusetts and the insurance carriers. The DOI Mission Statement states it’s primary mission is to overlook the solvency of it’s licensees to create and maintain a productive and willing market for insurance consumers. It also includes the following:

“Protection of consumer interests is of prime importance to the Division and is safeguarded by providing accurate and unbiased information so consumers may make informed decisions and by intervening on behalf of consumers who believe they have been victimized by unfair business practices.”

The mission statement exposes what the Division of Insurance is all about, but what exactly does it do? Take a look at the following, listed on the DOI website, to get a better idea:

  • License Insurance Companies: The DOI processes the license of each insurance insurance carrier to ensure only financially stable insurance companies receive and maintain a license to sell insurance.
  • Examine the Financial Stability of Insurance Companies: Monitoring insurance carriers through quarterly financial reviews the DOI looks for signs of financial instability. When financial worries arise the DOI will regulate the actions of the company to prevent insolvency.
  • Examine the Conduct of Insurance Companies: The Division will go further than finances, it also examines an insurance company’s customer relations. Examining everything from a company’s underwriting and rating procedures to renewals and claims the DOI looks to make sure the consumers are treated fairly.
  • Regulates forms, rates, and programs: Through regulating the forms, rates, and programs of each insurance company the DOI ensures products sold by each company follow Massachusetts laws and regulations
  • Provides license for producers and others involved w/ insurance: The Division provides insurance license for producers and others involved in the insurance industry. This ensures that a license will only be given to someone who is qualifies and will abide by Massachusetts laws.
  • Accepts Insurance Complaints: The Division of Insurance also accepts complaints against an insurer, producer/ agent, or appraiser involved in the insurance business. The Division will give each complaint a reply and/ or resolution explaining and coinciding with Massachusetts laws and regulations.

Managed Compeition… Success.

April 1st 2008 Massachusetts let the auto insurance industry loose. Shifting from state regulated rates to a managed competition many changes were brought to the Massachusetts auto insurance industry and consumers.

A study by the Department of Insurance analyzing this change included: a preliminary survey of 1,100 consumers, a comprehensive 30-minute survey of more than 4,500 drivers and one-on-one interviews with over 50 insurance agents and executives. This study has shown the overall shift to managed competition to be a positive step for the average Massachusetts auto insurance consumer.

The study showed in the first year of managed competition….

  • Massachusetts drivers saved over $270 million in auto insurance premiums.
  • The auto insurance premium dropped by an average of 8.2 percent.
  • Nine new insurance companies entered the Massachusetts auto insurance market. These new companies entering sparked a competition among themselves, bringing lower rates and better service options to customers.
  • There was a 13% decrease in the number of uninsured cars on Mass roads.

As many consumers saved bundles on affordable auto insurance rates, only three out of four consumers were aware of the insurance market change. The government realizes the lack of knowledge consumers have concerning the new auto insurance industry and hopes to educate the public with more education and outreach.

Why You Need More Than the Minimums

Auto insurance is anything but optional. Not only should you want to have car insurance, the sate requires drivers to purchase it. Two important coverages, among others, Massachusetts requires drivers to have are Property Damage and Liability Coverage.

Property damage covers damages the insured has caused to someone else property. Massachusetts state minimum for property damage is $5,000. This covers everything from street lamps and stop signs to other vehicles. Maybe you didn’t realize you were speeding when an oil spot sent you spinning into that Bentley… you’re still responsible for the damages and that $5,000 of coverage isn’t gong to do much. To be safe you should consider at least $100,000 of property coverage.

A second minimum coverage set by the state is Liability coverage. This includes bodily injury and property damage to others.  Maybe the state minimum will cover one person in a minor accident. But what if it was more than a fender bender? Or maybe there were passangers in the car you collide with? When multiple people are involved, or even just one in a decent accident – the $40,000 minimum state coverage isn’t likely going to cover all of the hospital bills, operations, medications, and therapy your accident incurred.

If you choose to only insure yourself to the state minmums, remember you are responsible for all expenses past what your insurance covers. Find out more about Massachusetts state minimum insurance requirements on the Massachusetts Division of Insurance Webpage.

Department of Insurance Report

The Division of Insurance or the DOI issued an executive summary about the progress of Massachusetts change to managed competitive. Under the old system, state regulators set the insurance rates that all automobile insurance companies were allowed to charge.

The new system has generated some excitement and brought in nine additional insurance carriers to the Massachusetts market. Insurance companies can now offer competitive rates, and additional products and services. This is very beneficial to the consumer but it is also important for the consumer to do research to find the best rates.

The program has been a success overall because Massachusetts Division of insurance reported that “Massachusetts consumers saved over $270 million in insurance premiums in the first year of managed competition.” There was also a “13 percent decrease in the number of uninsured vehicles on Massachusetts roads.”

There was a lot of speculation on what the new regulations would do for insurance providers, more particularly, the agents. Fortunately for agents, “sixty-nine percent of consumers continue to purchase coverage through agents, rather than purchase directly. This number is nearly twice the national average.”

The biggest issue is that “approximately three out of four consumers indicated that they were aware of the new auto insurance system, and those who were aware were 60 percent more likely to have saved money than those who were not aware.”

It seems apparent that the system has generated positive outcomes but education and notification for residents may be an area for increased performance.

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