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Managed Competition
Posted by Raven on July 17th, 2007
Wha?? Massachusetts is giving the peasants back some freedom? To chose?
Insurance Commissioner Nonnie S. Burnes yesterday said she plans to give the 4 million drivers in Massachusetts a taste of auto insurance competition next year, letting them shop around for the best deal for the first time in 30 years.
Instead of approving one set of rates that every company must charge, which has been past practice, Burnes said she plans to let companies set their own rates for 2008, under close supervision from the Division of Insurance.
The new rate-setting process will start April 1.
Oh my. Will the peasants be able to handle this? Will they know how to do this??
Burnes called the new system “managed competition,” but offered few details about how it would work. She said details would emerge when she issues regulations covering the competitive rate-setting process.
I knew this wasn’t quite what the head line made it out to be. That’s a new one. Managed Competition. Fercryinoutloud!
In a telephone interview, Burnes said companies would file their rates with supporting analysis, and they would take effect unless her office rejected them.
She said companies could base their premiums on such factors as driving record, the number and severity of at-fault accidents, and traffic violations.
She said she would view “with extreme skepticism” any rate proposal based on socioeconomic considerations, such as education, occupation, home ownership, or an individual’s credit score.
ok I can support this thinking. Education and credit ratings have little effect on one’s driving ability. AGE does have an effect and I do think younger and elder drivers should be considered a much higher risk…and they should have a higher rate to compensate for this.
Massachusetts is the only state in the nation where regulators set all auto insurance rates. Since 1990, 35 companies have abandoned the state because of its insurance system, according to the division. Many major national insurers, including Progressive Corp., Geico, and Allstate Corp., currently shun the state because of its heavily regulated system.
Several other states, including most recently New Jersey, have opened their markets to greater competition in the past decade. The moves have attracted more insurers to those states and often have resulted in lower rates for good drivers. But in some cases, rates for young and urban drivers have risen. Young drivers tend to have higher accident rates because of their lack of experience, while rates in urban areas are higher because of greater congestion, theft, and fraud.
Burnes vowed to protect young and urban drivers as Massachusetts moves toward auto insurance competition.
Heh…MA has very few insurers who will work with the strict and nanny state like rules. The insurance companies were loosing money left and right when doing business here…it’s no wonder they abandoned ship. I can only hope MA learns from past mistakes and allows the insurance companies to INSURE peasants based on the real risks. Friends from school, who live in MA, are paying 5, THAT’s FIVE, times the amount I pay for auto insurance; these friends are my age, have the same driving records and all that. We compared policies and they were PISSED off to see how little I pay vs. what they are FORCED to cough up.
Nanny state-ism doesn’t work. Take away the competition and you take away incentive to do better. In this context it means insurance companies leave the state and there are less resources to turn to. MA drivers have no concern about driving safely…
the good drivers who never get into accidents pay the same as those who cause multiple accidents. Managed competition is a start in the right direction but I bet it won’t last long. This is MA after all, the Nanny State of the USA.
July 17th, 2007 at 10:08 am
And this from the same state who just forced people to buy health insurance or go to jail. Morons. It’s called “freedom,” and the insurance commissioner there wouldn’t know it if it slapped her in the face.
Insurance companies should be able to charge rates based on education and credit ratings — because those factors DO help determine the odds of the insurance company paying out fees! If someone has a bad credit rating, they may not be able to pay deductables — which means the insurance company will have to pay. If they have poor education, they may be at more risk for an accident — which mean the insurance company pays.
In a free society, the insurance company would be able to charge rates based on ANY action of the insured that may result in higher risk — but MA doesn’t like nor want freedom.
July 17th, 2007 at 12:29 pm
Let me scare you a bit. The only other time I’ve heard the term “managed competition” was back during Hillary’s attempt to shove socialized medicine down all our throats back in ‘93 or so. The term was used to characterize her proposed system, by one of its supporters.
July 17th, 2007 at 4:29 pm
Ogre,
I don’t agree with the educational and credit reasons. And somewhere I have stats that back me up on this LOL…often, believe it or not, it is the younger or older people who cause the accidents and who don’t pay their premiums. People with poor credit are simply dropped when they don’t pay. Educational levels do not have an impact on driving skill and ability: These are myths put forth by the insurance companies to “justify” higher premiums. And of course in mandated insurance states, these reasons are allowed to prevail. Government gets bigger taxes payments too, from “high risk” insurance carriers. Think about it for a few…insurance carriers are by far, the richest and most affluent of all the industries. We can thank big government for this.
As for MA, they went the total opposite and wouldn’t allow carriers to assign hardly ANY risks…which led to being in the red constantly. So they left the state.