Insurance Machine

New Regulations Proves to be Real Benefit

Boston April 5, 2009 –
According to the Property Casualty Insurers Association of America (PCI), the realization of savings, a broader array of products and services and the opportunity to select from a wider range of carriers, as well as some of the leading national insurance companies, are being trumpeted through the success of the Commonwealth’s new regulatory environment for automobile insurance.

Vice president and regional manager for PCI, Frank O’Brien says that after one year’s experience with managed competition, consumers have experienced real advantages. He says that money drivers are actually saving money, something that is of real benefit in the present-day economy. O’Brien describes this new approach to regulation as breathing in new life into the auto insurance marketplace, and adds that the market had been languishing for 30 years. He points to the sudden entry of new insurers into the auto market along with the combined return of money carriers that left years ago, as being a definite sign of ample real success. For example, he sights that this year alone there are eight new auto insurers who begun to already write coverage for insured clients, or they will soon be doing so. O'Brien describes these new regulations as offering greater choices to drivers. This in turn has resulted in a drop in prices leaving the market with increasingly satisfied customers.

The Massachusetts auto insurance market was probably the least competitive in the nation before managed competition was implemented. The previous system of regulation provide to be inefficient and ineffective. The result of that system was to greatly restrict competition. The impractical rules of the previous system forced money insurers to leave the state at a very fast pace. For example, the evidence shows that in 1990 there were 53 companies that provided auto coverage in the state of Massachusetts. When reported for 2004, the number had plummeted to 19. During this same period, the number of insured vehicles in the state rose 21 percent. This increase means that it is necessary to have a larger number of insurers that can offer drivers an array of prices and products, not fewer. Compared with any other state in the country, by far, Massachusetts had the smallest number of auto insurance companies.

PCI’s O’Brien says that the conditions of the past are over and now Massachusetts is witnessing the benefits of competition. He says that all the available information and data indicate that the newer regulations off the state a successfully managed competition program that is presently creating a win-win scenario for drivers and insurers both. He sees the possible potential for even further enhancements soon to be provided making available to Massachusetts drivers even more benefits.

PCI is made up of a total of 1,000 member companies. These companies represent the broadest cross-section of insurers when PCI is compared with any other national trade association. Within the total group of PCI members over $176 billion in annual insurance premiums is written or 35.9 percent of the nation’s property and casualty insurance. The combined PCI membership writes 43.8 percent of U.S. automobile insurance. They cover 29.6 percent of the homeowners insurance market, 38.4 percent of the private workers compensation market, and 32.8 percent of the commercial property and liability market.