Does the auto insurance system need an overhaul?
The feud over overhauling Massachusetts’ auto insurance system, that has played out in dueling TV and radio ads for months, may move to the State House as soon as this week.
On one side is Fairness for Good Drivers, a group including local and national insurance companies such as Liberty Mutual Insurance of Boston and MetLife that want less regulation and more competition in Massachusetts’ auto insurance market.
They’re behind the commercials declaring “good drivers pay more for auto insurance so bad drivers can pay less.” The ads, which are no longer airing, featured Massachusetts drivers declaring the current system - that is highly-regulated and limits variety in pricing between customers - is “not fair.”
On the other side of the auto insurance feud is the Massachusetts Coalition for Affordable Auto Insurance for All, which includes Commerce Insurance Company of Webster, Arbella Mutual Insurance of Quincy and some independent insurance agents.
The “Coalition” until recently ran TV and radio commercials with New Jersey drivers warning that auto reforms in their state, similar to changes proposed at the State House, jacked up their rates. The Garden State drivers said their insurance coverage was affected by factors like having a credit card balance and parking on the street. “Fairness” wants Massachusetts’ current rate-setting system changed, the “Coalition” does not.
Gov. Mitt Romney last year proposed doing away with the state’s unique auto insurance setup, where state regulators set the rates insurers charge. The idea is to draw more big national insurance companies that now refuse to do business here and thus lower prices through competition.
Yet the “Coalition” argues Romney’s bill could translate to higher costs for drivers besides so-called bad drivers, and lead people to drop their insurance coverage and thus increase premiums for other drivers. The legislature’s joint Financial Services Committee is under a deadline to act on Romney’s bill by June 15.
Rep. Bill Galvin, D-Canton, serves on the Financial Services Committee. He and his brother Joseph head the Galvin Insurance Company in Canton.
This is a complicated issue, Galvin said, because while more competition is needed, more companies do not necessarily equate to equitable insurance rates.
“Auto reform is great, but the proof is in the details,” he said.
Galvin said there are two cases where he thinks auto insurance reform caused more harm - in New Jersey and here in Massachusetts three decades ago.
www.townonline.com
