MASSPIRG
is a non profit, non partisan public interest organization with 50,000
members across the state and have a long history of advocating for fair
auto insurance practices and plans. Most recently, a participated on
the auto insurance study commission lead by Consumer Affairs Director
Dan Crane.
Thank you for the opportunity to testify before the commission on
the issue of whether or not the “fixed and established” rate setting
process which has been in place for more than 20 years should be used
for setting the 2008 rates.
MASSPIRG strongly supports the continued fixed and established
rating process for 2008 because at this point it will better protect
Massachusetts drivers than a “deregulated” or competitive process. The
primary reasons are:
- Auto
insurance premiums have been dropping – significantly, and the trend is
likely to continue. Rates have declined by over 20% in the last 3
years. (-1.69 in 05, -8.7 in 06, -11.7 in 07)
-
Auto rates can decline even more significantly if you are more
aggressive during the cost containment portion of the hearing –
specifically focus on plans to reduce the states highest in the nation
accident rate (as measured by claims) and other cost containment
measures.
-
Newly adopted reforms should be reviewed before more changes are made.
CAR has adopted a number of reforms to prevent gaming of the residual
market by some of the insurers and a significant portion of the ERPs
have switched to voluntary writers. It may be possible that this has
eliminated some of the ‘problems’ with CAR.
-
Lastly, the current “fixed and established process” has many consumer
protections which must not be infringed or jeopardized. Any “regulated
or competitive” process should be done slowly and incrementally in
order to fully analyze and review the impact on consumers. Any new
rating system must preserve our critical consumer protections.
