Insurer Filings To Plunge Auto Rates In Mass.

Reacting to Massachusetts' new consumer insurance rate regulations, insurance companies announced decreases for auto insurance customers of up to 30 percent.

Nineteen companies made filings in time for today's deadline for companies doing business in the state, and all of them filed for decreases on average.

Prior to the inauguration of the new managed competition regulation, insurers' rates were set by the state insurance commissioner. The only variance allowed was for groups or good driver discounts.

The new regulation also changes the manner in which the state apportions high-risk drivers to insurers who are obliged to, offer coverage. Some carriers had complained that the old arrangement was inequitable, allowing some companies to game the system and avoid their proportional share of the residual market.

Among the insurers who said they will seek rate cuts, Worcester, Mass.-based Hanover Insurance Group, Inc. said its rates and product filing sought Division of Insurance approval to reduce the cost of auto insurance by as much as 30 percent for its best customers and 8 percent on average.

USAA said that it filed to reduce auto insurance rates throughout the state by 15 percent on average.

Travelers of Massachusetts in Worcester said it was offering new discounts and plans to provide savings to approximately 75 percent of its customers. It said more than a third of its customers will see savings greater than 10 percent, with some customers saving as much as 20 percent. Overall, not including the value of any discounts, customers can expect an average savings of 6 percent.

Hanover said it also asked to:

o Cut rates by 20 percent or more for approximately 25 percent, or about 40,000 of its customers. The company currently insures about 150,000 drivers in the state.

o Cut the state's six-year surcharge period--during which drivers pay penalties for at-fault accidents and moving violations as currently mandated by the state--in half, to only three years.

o Offer several new coverage options, as well as new or enhanced discounts and account credits that enable drivers to reduce their costs beyond simple rate reductions.

At the same time, the company announced that it will expand its presence in the state, adding more local independent insurance agents to its network.

"Contingent upon the division's approval, we will on April 1 offer Massachusetts drivers the competitive rates and innovative products they have earned," said Vincent Nieroda, president of The Hanover's Massachusetts personal lines group.

He said the regulatory change by Commissioner Nonnie Burnes mean Commonwealth drivers "will gain the benefits that a competitive market gives drivers in every other state--better products, services and pricing."

According to the statement from Mr. Nieroda, even though competition is just getting under way, Massachusetts drivers "will realize significant savings now, [and] many more benefits will evolve over time, as new companies enter the market, new products are introduced and companies fight for market share."

He said the company's plans to expand its already strong independent agent distribution channel also will benefit consumers.

Hanover said it will also offer deeper discounts for individuals who insure more than one car, drive less than 7,500 miles a year, or successfully complete a driver's education program. The company also will offer a new discount for drivers who take an advanced driver training program, and will offer an account credit for any driver who purchases insurance for his or her cars as well as his or her apartment, condo or house.

For certain products under certain conditions, Hanover said it will waive the surcharge for one at-fault accident under a driver's policy every 36 months.

The Hanover, which currently insures more than?????, will make Connections Auto available for new and renewal business effective April 1, contingent upon approval. Connections Auto, like all of The Hanover's products, will be sold exclusively though the company's network of independent agent partners.

USAA announced said it was able to offer lower rates due to the state's regulatory improvements, "which for the first time in nearly 30 years allows private insurers to set their own rates." If approved, the company's decrease goes into effect April 1, 2008.

USAA said for a number of years it has wanted to pass along the savings it has realized through efficient operations and decreasing claims costs, "but the state regulatory environment required a one-size-fits-all approach.

"Until now, all insurers writing policies in the state were required to charge rates annually set by the Commissioner. USAA members and policyholders residing in Massachusetts will benefit from a newly dynamic marketplace that fosters competitive pricing and services among insurance providers."