For the second year in a row, Massachusetts auto insurers have filed for rate reduction. For 2007, the industry’s rating bureau is recommending rates be cut an average 3.7 percent.
If approved, that would mean about $150 million in premium savings for drivers next year.
Insurance Commissioner Julianne Bowler approved an average 8.7 percent cut for this year.
According to the Automobile Insurers Bureau of Massachusetts, the reduction results from a “substantial drop in insurance injury clams” in 2005.
AIB cited a succcesful anti-fraud program known as the Community Insurance Fraud Initiative as a prime driver in the drop in claims. Begun in late 2003 in Lawrence by the industry’s Insurance Fraud Bureau, the Essex County District Attorney and the Lawrence Police Department, the CIFI program focuses on cities where data indicates there is a higher than average number of claims. There are now eight such task forces across the state in high-claim cities. While these cities have only 11 percent of the state’s population, they have accounted for 56 percent of the decline in injury claims, according to AIB.
As part of this year’s rate filing, the AIB is also recommending that the multi-car discount be increased from 5 to 10 percent and that certain anti-theft device discounts be reduced to reflect actual theft experience.
AIB also recommends that towns with the fraud task forces have their rates lowered more quickly than the statewide average as their experience improves.
Massachusetts is the only state where the commissioner sets rates for all insurers. The annual hearing process includes the AIB’s recommendation along with recommendations, not yet filed, from the consumer division of the insurance department and the attorney general’s office.
Legislation to change the system to a competitive rating model has been stalled in the state Legislature. While Gov. Mitt Romney has supported the legislation, the industry has been split, with agents and some domestic insurers opposing it and other insurers backing it.