Years After Reforms, Mass. Steers Toward Auto-Market Stability
By Rick Cornejo | |
A.M. Best Company, Inc. |
In
So despite issues like a ban on the use of credit-based insurance scoring and frequent rate challenges from the state Attorney General, "The best thing is to have stability, to not have any changes, to not have retrenching and go back to what was before," Tetrault said. "The dynamic exists for potential retrenchment. It's an active issue."
Numbering among the opponents of reform: one of the largest auto insurers in the commonwealth.
"We were absolutely on the other side," said
"We thought that the old system was not necessarily broken," he explained. The only difference between the old rate-setting system and the new managed competition system is under the old system, profit margins were smaller. A mutual like
"This is really about how much profit an insurance company can make," Donohue said, noting more companies have entered the market since the reforms, but there was nothing stopping them from entering it under the old system. "They chose not to because they did not like the regulatory system."
While
He notes while rates dropped with the entry of new insurers, "since '09, more companies have been taking rate increases than rate decreases." Some have been taking them twice a year, Donohue said. "That would not have been allowed under the old system."
Tetrault said
Donohue said "time will tell."
He fears prices may go up faster in the future, harming the consumers who need to know how much money to put aside to pay premiums. He noted that when new companies came to the market, they had very low pricing to gain market share quickly. Afterwards, they filed for significant rate increases.
These new entrants in a new system were one of the biggest challenges faced by insurers already in the market, said
"We feel pretty good about how we handled this major change to our largest market," Donohue said. The company has introduced some new products and pricing since the reforms. "There's definitely been an increase in advertising...We think that's helped us in the marketplace."
Tertault called the boom in advertising in both
Donohue said "more choice is always better," but also noted the market was starting to see some stability in fewer new entrants and less new products. "There hasn't been any wide swings like in
"
(Editor's Note: The
(By
Copyright: | (c) 2012 A.M. Best Company, Inc. |
Wordcount: | 899 |
Brian Golick Tapped as Senior VP by Sterling & Sterling Insurance
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News