Good
Morning. My name is Eric Bourassa and I am a consumer advocate for the
Massachusetts Public Interest Research Group (MASSPIRG). MASSPIRG is a
statewide, non-partisan, non-profit public interest advocacy and
watchdog organization with over 50,000 members across the Commonwealth.
I am here today to present public comment in support of lowering the
state set ceiling on private passenger auto insurance rate for 2007 and
to encourage you to adopt a more aggressive campaign to reduce our
highest-in-the-nation accident rate as another tool to lower insurance
premiums for consumers.
Automobile
insurance is a significant, legally mandated household expense, without
which consumers place their financial security and livelihood at risk.
Annual rates were cut this year by 8.7% and 1.7% in the year before and
have declined 21% since 1996. Despite the rate reductions our average
premium is still high and we ought to do everything in our power to
lower the cost for consumers.
Given
that the insurance industry has proposed a decrease of 3.7%, history
would prove that the new state set ceiling should be significantly
lowered. And, given the industries’ statements about the continual
decline in claims, we hope you will be aggressive in determining the
new rate.
Second,
despite recent efforts and debates about various insurance regulatory
reforms, the blame for our high auto insurance cost belongs to
Massachusetts’s ultra-high accident rate. Massachusetts has the dubious
distinction of having the highest accident rate in the country by far –
an astounding 40% higher than the state with the second-highest rate,
Rhode Island, based on claims data reported by the Insurance Research
Council. Even improving our worst-in-the-nation accident rate to second
worst could drop our premiums by nearly 25%, or about $250 on average
per car, producing $1 billion in statewide savings.
The
main factor driving our insurance premiums is our accident rate, since
premiums correlate closely with the accident rate. Therefore the most
effective way to reduce Massachusetts automobile insurance premiums is
to focus on reducing the underlying costs of our auto insurance system,
including the state's high rate of accidents.
The
Division of Insurance should use their authority and resources to
Identify and adopt a comprehensive plan to reduce the state's
underlying costs, including our high accident rate. The reforms to
reduce the state's costs and accident rate must involve state and local
government, the insurance industry, police, drivers and insurance
regulators.
A comprehensive plan should consider all proposals to lower rates including the following reforms;
- Identifying and redesigning the most dangerous intersections in the state;
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Adopting a primary seatbelt law;
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Informing drivers clearly and regularly about the full cost of
at-fault accidents, speeding tickets, and other traffic violations on
individual automobile insurance rates;
-
Improving enforcement of traffic violations in conjunction with a
review of existing traffic restrictions to ensure that they are
appropriate, reasonable, and not unnecessarily restrictive such that
they dilute the weight of their public safety purpose;
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Discounts for safer vehicles;
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Discounts for individuals who participate in driver education programs;
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Initiatives to combat drunk-driving;
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Discounts for consumers who agree to use their own health insurance in case of accident related injuries;
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Improving traffic lane markings, traffic lights and signals, and road/street signs;
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Prohibiting the use of wireless phones while driving;
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Making it easier for consumers to switch auto insurers;
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Disclosing and making accessible better and more information about any/all discounts companies are offering; and
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Eliminating incentives to engage in fraudulent activities, revising
existing penalties for committing fraud, and increasing enforcement
aimed at eliminating fraud.
