THE
AUTO insurance bill offered up this week by House members from the
Joint Financial Services Committee is not appreciably better than an
earlier, ill-conceived version from Governor Mitt Romney, who thought
little of burdening urban drivers with higher rates for a chance to woo
national insurance carriers to Massachusetts. While such proposals
might promote competition, they hardly qualify as serious reform of the
state's auto insurance system.
Clashes
are underway between domestic insurance companies, like Commerce, that
defend the current system of flattening rates for drivers in low-income
neighborhoods and big-name insurers, like Geico, which eschew the
state, in part, because the rules here don't allow them to reject
clients or use company-controlled criteria to set premiums. The new
bill, sponsored by Representative Ronald Mariano of Quincy, comes down
squarely in the camp of the out-of-state titans. It would phase out
state-set rates over five years and open the door for companies to use
factors that have little to do with driving records, such as education,
occupation, and homeownership status, when determining premiums.
On
the surface, it might seem unfair that roughly three-quarters of the
state's drivers pay about $100 more each year for auto insurance so
that mostly urban drivers, who live in areas with more accidents and
theft, as well as young drivers, can pay about $400 less. But that
system starts to look better when compared with states where premiums
are driven up by the risk of getting into an accident with uninsured
drivers who are priced out of the market. There is security in knowing
that all drivers in Massachusetts are required to carry auto insurance
and that premiums are determined by defensible criteria, such as
driving records, experience, and geographic area. While in need of some
reforms, auto insurance here is basically sound and looks even better
in recent years as rates have fallen.
Boston Globe Editorial
Senate
leaders are heeding warnings from the Center for Insurance Research in
Cambridge, which predicts that passage of the House bill could push
premiums 25 percent higher in many urban neighborhoods. Mariano scoffs
at that estimate. But Senator Dianne Wilkerson of Boston calls his bill
``the most disastrous economic policy that I've seen in my time in the
Senate." Senator Andrea Nuciforo of Pittsfield, co-chair of the
Financial Services Committee, thinks the bill is so pernicious that he
vows to ``drive a dogwood stake through the heart of the proposal."
Thoughtful
legislation aimed at preventing accidents and cracking down on the
state's high rate of fraud would be the right place to start. That
can't be accomplished with a House bill that antagonizes urban drivers
and feeds feuds in the insurance industry.
