Driver’s seat

The last time — January 1977 — Massachusetts tried to introduce competitive rating into private passenger auto insurance, a Democrat, Michael Dukakis, was governor. The experiment lasted about seven months before being abandoned due to political pressures when rates rose, particularly for urban and young drivers. The Bay State returned to being the sole state where the regulator sets rates for all auto insurers.

Since the Dukakis years, Massachusetts has had mostly free-market Republican governors — William Weld, Paul Cellucci, Jane Swift, Mitt Romney — who tinkered around the edges with regulations but never built up the political muscle to overhaul the state’s auto coverage pricing system.

Now, 30 years later, another Democrat, Deval Patrick, is in the governor’s chair, and it is this supposdly liberal Democratic administration that is taking the political risk of changing the system, introducing what it is calling “managed competition” into the state’s highly-regulated auto insurance system beginning in April 2008.

There is no question this is a big political risk for the Patrick administration, whether or not they know it. There has been no outcry for change from a motoring public that has enjoyed several consecutive years of rate cuts. Several powerful domestic insurers like the system just the way it is and haven’t been shy about working to keep it that way. Perhaps most important, the state’s powerful agent community isn’t behind the switch. A number of politicians have already warned Gov. Patrick’s insurance commissioner, Nonnie Burnes, she is playing with fire.

Burnes, previously a judge, dismissed the opponents’ arguments and legal questions in her very thorough decision. In her view, given the way the law is written and the evidence before her, there is no choice but to return to file-and-use. She wrote that “no time is better than now” to make the change. She seems determined not to be drawn into the same old politics that have derailed past attempts. Gov. Patrick reportedly had no input into her judicial-like ruling.

But it always comes down to politics. It’s possible that Democrats in the state Legislature who opposed past attempts by Republicans to introduce competition will give their Democratic governor a break but don’t count on it.

It’s also possible that Burnes will be able to develop guidelines that give insurers and good drivers more in their wallets without upsetting high risks and their advocates but it won’t be easy.

It’s much too early for proponents of competitive rating to declare victory. Those who have witnessed how politics have driven auto insurance since 1977 know it’s too soon to tell who will be in he driver’s seat come April of next year.