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Gee, who'd'a thunk this might not work?

Ah, time for more Massachusetts bashing...

One of the many things that makes Massachusetts unique is that the commonwealth is the only one of the fifty states that regulates auto insurance rates. No, that's not fair -- they set them, and insurers who don't like that can just take their business elsewhere.

And, surprise, surprise -- a bunch of them did. Currently, there are only 18 companies that offer people auto insurance in Massachusetts -- and that will go to 17 soon, as yet another one has said they they've had enough.

Lawmakers have been calling for "insurance reform" for some time, hoping to find the magic formula that will not only persuade the companies still doing business in Massachusetts to stay, but perhaps entice more to come in. For example, in Massachusetts you can watch a gecko do the robot, but you can't buy auto insurance from him.

Here's a radical thought for those learned solons of Beacon Hill: if you're doing something different than any other state, and you're having problems in that area that no other state is having, ther just might be a connection.

Nah, that'll never work. Too much like logical thinking. It'll never fly.


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Comments (10)

My insurance company, USAA,... (Below threshold)
Corky Boyd:

My insurance company, USAA, is a member owned mutual company which shares its "profits" with its members (policy holders). That is except in Massachusetts. The state won't let them.

Rates are not capped in Massachusetts, they are fixed. USAA which has exceptionally low rates to begin with, can't charge their own rates and can't pass on their "obcene profits" to their Bay State customers. They have to keep them and pass them on to their members in other states.

Thank you Massachusetts!

Corky Boyd
Resident of Florida
No state income tax, no death tax and growing like crazy! And the weather isn't bad either.

All states regulate auto in... (Below threshold)
meep:

All states regulate auto insurance, and that includes the rates charged.... but the regulations generally amounts to: a) the companies have enough money to cover expected claims and a margin for adverse events; b) the companies do not discriminate unfairly (by whatever criteria) in setting rates.

That's the main upshot of it.

I'm not sure why the state of MA thinks it has the knowledge to set insurance rates. I'm an actuarial associate at a life insurance company, and I can tell you that it takes quite a bit of info and expertise to set insurance rates.

Are car insurance charges a... (Below threshold)
Nicholas:

Are car insurance charges as insane in MA as they are in CA?

When my friend who lived in the Hollywood Hills told me how much he paid for insurance I nearly fell over dead. He's a good driver and as far as I know has never caused any accidents, and he doesn't have a particularly fancy car.

For what he paid per year, I can buy myself a second-hand car *and* insure it.

I suspect it's because of the reckless drivers and horrible traffic I saw while I was visiting. I'm not surprised if the accident rate is high. Pity safe drivers have to pay for it...

The rates you pay in MA de... (Below threshold)
plum:

The rates you pay in MA depend on the usual factors: driving record, age, where you garage your car, etc. I carry the minimum allowable insurance called 'comprehensive' which runs around $500.00 annually for a 2002 Civic. People in high congestion areas like Boston or Lawrence, where theft and insurance fraud abound, pay through the nose even when they have clean records.

As I recall, the regulation... (Below threshold)
Jay:

As I recall, the regulation of insurance really took off years ago (I was still a kid) when people decided it was unfair for wide disparities to exist in rates between inherently higher and lower risk localities, and so forth. That and the rates being perceived as high, and wanting to manage (or eliminate) who is considered "at fault" in an accident also played a part.

Insurance is mandatory, nobody can be turned down, and accidents or tickets affect your rating, resulting in an added fee. Which is actually expressed in reverse, as a "discount" for safer drivers. My insurance is absurd at the best rating you can get. It's about $500 - 600 for each car for slightly better than the minimum mandated policy. Officially the "real" rate is hundreds more per year each car, but I have a perfect record.

Each year the insurers petition for an increase. Each year the insurance commissioner gives them anywhere from a decrease to almost the amount they asked for; usually well below. The insurance companies blame it on the repair shops. The repair shops are lucky if they can make any money because the insurers impose rates on them that would have been fair twenty years ago. And now they're in a worsening squeeze for qualified help, with it a dirty job few people aspire too, and increasingly complex.

It's pretty much a mess.

The current system of "fixe... (Below threshold)

The current system of "fixed and established" rates in Massachusetts was brought upon us by --- you'll never, ever, ever guess....what's that? You say Michael Stanley DUKAKIS? Why, you would be correct.

The system mandates that NO ONE CAN BE DENIED, no matter what their driving history is (even if their license has been revoked for, say, drunk driving) --- and those crappy drivers that cost the companies so much money are apportioned among the carriers in what is euphemistically called the "high risk pool." The biggest game among the (remaining) carriers here is the management of this (cess)"pool" of drivers and how to arbitrage their risks.

Efforts to retreat from this mandatory/fixed rate market to something even middle-of-the-road are stridently opposed by the "plaintiffs' bar," a.k.a ambulance chasers, who argue that victims will be left to chase judgment proof perps because competition in the system willr esult in young urban drivers opting to drive uninsured.

We also have the notiorious "no fault" system, but that's the subject o another post (California's rates have skyrockted because of no-fault).

No fault is the biggest ins... (Below threshold)
mesablue:

No fault is the biggest insurance scam ever foisted on us. They shoved it down our throats in Michigan by promising lower rates because of a forcasted drop in litigation costs. They then got rid of the high-risk pool, made insurance mandatory and started raising rates to astronomical levels. I live in SE Michigan and pay $2200.00 a year for a three year old truck -- I have never had a claim and no tickets in twelve years. It's just what people think of as normal here. The same truck insured for $800.00 in Chicago (in the city limits) for the same coverage. Illinois implemented no fault a few years ago, so they are not far behind.

I'm all about free markets and competition, but when the government requires you to buy something there was to be some way to keep the companies under control. There is no way it should cost me nearly three times as much to insure the same vehicle, especially when I'm moving from the inner city of one town to the suburbs of another.

The people of Mass. better not wish for too much change or they'll end up paying back those years of savings very, very quickly.

No fault insurance - proof ... (Below threshold)
blueeyes:

No fault insurance - proof of how bad socialism can get. Drive backwards down a street while drinking massive amounts of alcohol, and EVERYBODIES insurance rates go up.

JayYou know very wel... (Below threshold)

Jay
You know very well that the legislature in Massachusetts is made up of the World's Smartest Lawmakers, and the reason nobody else does things that they do is that the others just haven't seen the wisdom.
Oh, wait, sorry, Connecticut went through this same process on auto insurance years ago, and abandoned it.

blueeyes: how exactly would... (Below threshold)
bill:

blueeyes: how exactly would auto insurance rates go, given that same situation in a state that didn't have "bad socialism"?

i'll give you a hint, it's not down.

from a previous post in the thread about auto insurance regulations.

a) the companies have enough money to cover expected claims and a margin for adverse events;




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