Testimony in Favor of Docket # R2007-03 Fixed and Established rates
Before the Commissioner Nonnie Burnes, Commissioner of Insurance

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.

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