If Massachusetts private passenger auto insurers get their way, the rates they charge drivers in this state will increase an average 5.8 percent next year.
The Automobile Insurers Bureau of Massachusetts (AIB) has requested that amount — which tallies about $250 million — on behalf of insurers but its acceptance is far from assured.
If approved in full, the 5.8 percent request would increase the average rate by $68, raising it to $1144, up from $1082 now.
The recommendation is subject to counterproposals and a round of public hearings before the Insurance Commissioner Julianne Bowler issues final 2005 rates in mid-December.
Insurers requested a 12 percent hike for 2004 but got only 2.5 percent increase. In fact, rates in the state have actually been cut 20 percent over the past 10 years.
About 1.6 percent (or $17 on the average) of the request is attributable to insolvency fund and safe driver plan recoveries required by law, according to AIB.
Explaining the rest of the in increase, Daniel Johnston, president of AIB, noted that the state’s auto insurance system experienced a “slight increase” in the number of claims per car for all major coverages.
Hearings on all facets of the rates for 2005 begin soon, with counterproposals expected from the State Rating Bureau and the state attorney general before they are completed. Agents must also defend a commission figure. A final decision on 2005 rates is due by Dec. 15, 2004.
There will be one difference from previous year’s rate schedules when 2005 rolls around, Traditionally, new rates would go into effect beginning Jan 1. However, the state just enacted legislation moving the effective date for new rates to April 1, 2005.
Therer are four million insured cars in the state, according to the AIB.