The last bid in the process of setting 2005 Massachusetts private passenger auto insurance rates is in. The State Rating Bureau (SRB), the consumer arm of the Division of Insurance, has recommended that rate go up just slightly, an average of one percent.
That contrasts with the industry’s request for a 9.2 percent increase and with the critical filing by the state attorney general, who earlier this week called for a 6.2 percent cut.
SRB Director Kevin Beagan said the one percent recommendation is based on 2003 data. “The insurers’ and attorney general’s request are once again far apart,” he noted. “We see our recommendation as more reasonable and adequate based upon the evidence presented.”
Beagan said that while 2003 bodily injury and personal injury claims frequency rate are “basically level” with those of 2002, claims for property damage have gone up 6.3 percent and there has been a 14 percent jump in auto glass claims.
Attorney General Tom Reilly has maintained that auto insurance in the state is more profitable than it should be.
“Excessive insurer rate increases have been the norm in Massachusetts,” Assistant Attorney General Peter Leight recently argued. He maintained that insurers have over-predicted losses an average of four percent a year over the last decade, which he said translates into “hundreds of millions of dollars of excess profits.”
The Automobile Insurers Bureau had originally asked for an average increase of 5.8 percent for insurers but that figure did not reflect the request by agents for a 32 percent jump in average commission from $114 to $151.
The hearings will continue with questioning of actuarial and financial experts before the commissioner announces a decision, which usually occurs on the deadline of Dec. 15.