Special insurance section: Auto insurance market sees biggest change in decades

Jon Chesto

As a state steeped in history, Massachusetts has more than its fair share of unique traditions. But one of them just disappeared: the state’s strict auto insurance regulations that essentially made rates among insurers carbon copies of each other.

For the first time in more than 30 years, insurance companies are allowed to set their own rates for policies in this state. The switch to a competitive system took effect last month and has brought plenty of choices – and plenty of confusion – to Bay State drivers.

Until now, the insurance industry and the state’s Division of Insurance conducted an unusual mating dance of sorts every year. The car insurance industry would present a set of rates to the insurance agency every August for all insurers in the state. Then the state’s attorney general would weigh in, asking for a better deal for consumers. Finally, the insurance commissioner would approve a standard set of rates in December for the following year.

The ritual was put to rest last year by Nonnie Burnes, a Superior Court judge who was picked by Gov. Deval Patrick to run the insurance department.

Burnes decided that competition was healthy enough in the state for her to abandon the tradition of “fixed and established” auto insurance rates. A Supreme Judicial Court ruling in 2006 that backed the commissioner’s authority to redesign the state’s pool for high-risk drivers – a complex system that kept many national insurers away – also helped set the stage for the reforms.

In November, Burnes accepted rate proposals from 19 insurers that currently sell auto insurance in the state. She signed off on those rates in time for them to take effect for drivers whose policies were up for renewal in April.

The market changes prompted many insurers to step up their advertising efforts and to create policy bonuses that range from discounts on oil changes to coverage for pets who ride in the car.

The market changes, however, don’t necessarily mean prices will go down for everyone. The average price decline among all insurers from the previous year’s rates is nearly 8 percent. But prices had been expected to drop anyway under the previous system. Companies now offer better deals to attract and keep those drivers who are seen as the least risky, while some drivers with bad records or other traits insurers don’t like could see price increases.

For many motorists, it might make sense to stick with their current insurance company. But many others may find that they can save some money if they check out the competition.

Massachusetts residents finally have something that drivers in all other states already had – the ability to choose among different auto insurance plans.

Jon Chesto may be reached at