Auto insurance deregulation may have increased premiums in Massachusetts
According to the Attorney General's office, deregulating the auto insurance market in 2007 has resulted in higher costs and less transparency for Bay State driversDeregulation of the auto insurance market may not have been a good thing for Massachusetts drivers, a report from Attorney General Martha Coakley says.
The report, released in late December, suggests that insurance companies now use socioeconomic data to calculate premiums. Prior to deregulation in 2007, insurers could only use car- and driver-specific actuarial data. Now, as in many other states, premiums are calculated based on personal data like ZIP code and credit history, and many vulnerable groups are paying more for insurance.
In addition, Coakley says, drivers aren't shopping around enough to drive prices down. Insurers' profit is increasing, though: some rates are 150 percent higher than they were prior to deregulation.
Another significant difference is that insurers can reject policy applications, something they couldn't do before 2007.
"Our office is concerned that consumers may not, in fact, be getting the best rates and the protections they deserve" on auto insurance policies, Coakley said.
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Posted: December 28, 2009
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