Massachusetts Finally Reconsiders Restrictive Auto Insurance Laws

August 13th, 2007 by Jeannine C

For years Massachusetts has had the most restrictive laws in the nation concerning auto insurance rates, to the point that the state actually told insurance companies what they could charge and how much of a rate increase or decrease should be allowed.  As a result, many major companies quit offering insurance to residents, and the remaining choices were quite limited.

Now Gov. Deval Patrick has developed a plan that would permit auto insurance companies to use additional factors to determine rates which better reflect the risks the they are likely to face when covering an individual, including socio-economic factors such as income and occupation.

A few State senators fear that using some of these factors will discriminate against groups of drivers.  However just last month the FTC released a report confirming that it is acceptable for credit scores to affect auto insurance rates because they are a reliable predictor of risk.

The other 49 states permit insurance companies to use factors such as income and credit scores, driving records, occupations and geographic locations to determine automobile insurance rates.  The results accurately forecast the risk faced by insurers, enabling them to thus set more competitive rates.  This means that consumers with good driving records and other factors pay less, while drivers with poor records and bad credit pay more, just as they should.

Massachusetts tried to use legislation to force insurance premiums to fit their definition of “fair”.  The problem is the legislature is not in the insurance business. Their actions actually hurt consumers, as the state legislated them right out of benefits like accident forgiveness.  Now it’s time to remove those restrictions and allow state residents to benefit from a competitive marketplace.  The results could easily be far better than anything the government could ever impose.

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Listen to Massachusetts Finally Reconsiders Restrictive Auto Insurance Laws
Listen to Massachusetts Finally Reconsiders Restrictive Auto Insurance Laws

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