Commissioner Julianne Bowler approved new rules that change the infrastructure of the industry. Her office called the changes, developed after a year of public hearings and comments from the industry and consumer advocates, the most significant reform in private passenger auto insurance in more than a decade.
Bowler's office says the change could directly affect more than half a million drivers, up to 14 percent of all motorists in the state. But consumer advocates say the changes could narrow choices for up to 25 percent of drivers.
The new rules will create a Massachusetts Assigned Insurance Plan as of Jan. 1, 2008. That system will assign individual high-risk drivers to insurers -- a change from the system which currently assigns agencies, not individuals, to insurers. That system allowed for maneuvering by insurers working the high-risk market, officials said. The new plan is intended to more equitably distribute those deemed at high risk.
High-risk drivers are defined as those with an at-fault accident or moving violation within the three most recent years, or five years if their record included a vehicular felony or drunken driving conviction.
Gov. Mitt Romney applauded the changes as an important step in reforming the system. "The reason large national auto insurers have pulled out of this state is because the system is broken," Romney said. "The commissioner's ruling will help make Massachusetts more attractive for insurers to do business and ultimately provide greater choice to our drivers."
Consumer advocates disagree. Steve D'Amato, executive director of Center for Insurance Research based in Cambridge, said the changes will eliminate choices for drivers, even those who've had only one speeding ticket in their lives, if it happened within the three most recent years. "This is an insurer-driven reform, this is not a consumer-driven reform," he said.
The Coalition for Automobile Insurance Reform, which includes 16 of the 19 insurers currently writing private passenger coverage in Massachusetts, representing 66 percent of the statewide market, said the changes make the state better for consumers and "more hospitable for companies who wish to do business here." Fifteen years ago, the state had 61 auto insurance companies.
Bowler's office estimates up to 560,000 drivers, or 14 percent, could be put into the assignment system. Consumer advocates say it will be many more than that, possibly up to 25 percent, according to Masspirg. They also say changing the way high-risk drivers are assigned alone will not attract new carriers.
Chris Goetcheus, a spokesman for Bowler, said the commissioner took pains to add consumer protections to the plan.
"We have gone to great lengths to ensure that drivers retain their discounts, that drivers are not placed in the plan who have good driving records regardless of where they live," he said.