Managed Auto Insurance: Good or Bad?

by Alan Long

It has been a year since Massachusetts introduced managed competition into the automobile insurance market. What’s the verdict? Has competition been a good or bad development for our clients?

Managed competition has been a good thing for good drivers. Our clients with excellent driving records (no moving violations and no at fault accidents) have benefited most. Many clients have seen premium reductions ranging from 10-30 percent, and rates are continuing to trend lower in the second year of competition.

Managed competition has been a bad thing for bad drivers. Clients with multiple moving violations (i.e. speeding, reckless driving, DUI, etc.) have seen rates increase in the first year of competition (the rate increase on any driver was capped at 10 percent to avoid major disruption in the marketplace). In year two, however, the cap increased by another 10 percent so bad drivers will continue to see their rates and premiums go higher.

Our clients have broader coverage options. This is a good thing! Although not all options are available with all insurance companies, several to consider are: Accident Forgiveness, Disappearing Deductibles, New Vehicle Replacement and Pet Injury Coverage. See your options. Please call us at 800 945-1840, e-mail us at info@ELInsurance.com or stop by the office if you would like further details on coverage options now available in Massachusetts.

Managed competition is a move in the right direction. The state’s Commissioner of Insurance should continue to phase out the subsidies that existed under the old system and permit true and open competition. This would benefit our clients who have earned and deserve the best rates competition has to offer.

• Read all INSURANCE CURRENTS, Summer 2009 Articles