As expected, auto insurance rates in Massachusetts will be going down again in 2007, this time by as much as 11.7 percent on average.
Massachusetts Insurance Commissioner Julianne M. Bowler today announced the decision in the 2007 private passenger insurance rate case that results in a statewide average rate decrease of 11.7 percent next year. The new rate takes effect April 1, 20076 and translates to an average decrease of $119.61 per vehicle and a statewide average annual rate of $898.812.
This is the third consecutive year that rates have been cut. This year’s rate cut saves Massachusetts drivers $479 million dollars and is the largest rate decrease since 1978, according to Bowler.
“Today’s decision reflects the continued trend of claims decreases, both in Massachusetts and nationally,” said. Bowler. “While this rate decrease is good news for Massachusetts drivers, it is no long-term solution to the problems that plague our system. Our analysis of the 2007 rate case resulted in a substantial rate decrease for consumers as well as an appropriate and adequate rate for those insurers who still write insurance in the Massachusetts private passenger insurance market.”
Her boss used the announcement to pitch for reform to the system.
“This is welcome relief for Massachusetts drivers. Bringing rates down helps alleviate the high cost of living. I believe we can do even more along these lines if we commit ourselves to reforming the system to make it more competitive, which will lead to even greater rate deductions and savings,” said Gov. Mitt Romney.
Bowler’s decision came down between the recommendations of the her department’s own consumer staff and the attorney general.
The State Rating Bureau, a unit of the Division of Insurance, had called for a statewide average decrease of about 8.3 percent.
Attorney General Tom Reilly urged her to cut rates more than double what the SRB suggested. His office recommended an 18.2 percent cut, worth about $180 a year per car.
The two consumer filings followed one made by insurers themselves indicating a 3.7 percent cut is warranted. According to the industry’s Automobile Insurers Bureau of Massachusetts, its proposed reduction reflected a “substantial drop in insurance injury clams” and successful anti-fraud efforts.
Bowler approved an average 8.7 percent cut for 2006.
As a result of a law enacted in 2004, the rate approved by Bowler today will be effective April 1, 2007 instead of the normal January 1 start date. The new law allows insurers to have time to calculate the rates resulting from today’s decision so that April bills will include the new rate and reduce insurer expenses associated with provisional billing.