The Hanover Insurance Group, Inc. was one of the first insurers to tout its competitive rates and product filings at today’s deadline for auto insurers looking to compete in Massachusetts under the new managed competition system.
In its filings, Hanover is promising rate reductions of as much as 30% for what it labels its “best customers” and 20% savings for another 25% of its customers. Overall the company estimates about 70% of its 150,000 auto insureds in the state would qualify for rate reductions under its program.
The insurer also said it is looking to appoint additional independent agencies in the state and to offer various product enhancements previously unavailable to Massachusetts drivers.
Hanover made its plans known in a rate and product filing submitted today to the Division of Insurance for approval for use next April when the state’s new managed competition system goes into effect.
In addition to rate cuts for the best customers, Hanover hopes to compete by cutting in half to three years the state’s six-year surcharge period during which drivers pay penalties for at-fault accidents and moving violations.
The company said its “best customers” are those with good driving records who might also reflect other “broader” factors such as being long-time customers of the company or purchasers of additional products from Hanover.
Vincent Nieroda, president of The Hanover’s Massachusetts personal lines group, stressed that this is just the beginning of its competitive offerings.
“Even though competition is just getting under way and Massachusetts drivers will realize significant savings now, many more benefits will evolve over time, as new companies enter the market, new products are introduced and companies fight for market share,” he said.
“The rates and product innovations included in our filing reflect the first of many changes we expect to make as managed competition evolves,” he said. “Now, instead of once a year, we can continually adjust our rates and improve our product offerings, as we develop them, just as we do in other markets. This will ensure that we are able to provide our customers with the best value possible.”
Nieroda said the company’s plans to expand its independent agent distribution channel which now covers about 250 locations. It hopes to add from 80 to 100 new agency contracts over the next two years.
“Independent agents have always helped drivers make important insurance decisions,” he said. “Now that companies will offer differing products, it is even more important to get the help of an independent agent to make the right choices.”
Nieroda told Insurance Journal that he anticipates there will be some consolidation of agencies in the state. He said that his company will be looking to add agencies that are willing to partner and plan with it in growing their businesses in both personal and commercial lines.
“We want to be a major player with the agency,” he added.
Pending approval by the Division of Insurance, The Hanover’s new auto product, Connections Auto, will provide liability, collision and medical payments coverage, and will help some drivers save money by taking advantage of a range of account credits and discounts.
According to Nieroda, the Connections multivariate program has been tailored to comply with the state’s ban on the use of certain socioeconomic criteria including credit scoring and home ownership.
He said he anticipates the product will be approved.
As part of its program, The Hanover will offer deeper discounts for individuals who insure more than one car, drive less than 7,500 miles a year, or successfully complete a driver’s education program. The company also will offer a new discount for drivers who take an advanced driver training program, and will offer an account credit for any driver who purchases insurance for his or her cars as well as his or her apartment, condo or house.
Connections Auto also will offer two package options Connections DriveSmart and Connections DriveSmart Advantage. Connections DriveSmart will offer drivers Second Chance Accident Forgiveness, where under certain conditions The Hanover will waive the surcharge for one at-fault accident under a driver’s policy every 36 months; Ultimate Towing and Labor, which pays increased limits for eligible towing and labor cost and Ultimate Rental Reimbursement, which pays eligible car rental costs for an extended time if an insured’s vehicle is damaged in an accident.
Connections DriveSmart Advantage provides additional benefits including New Car Replacement Guard, which pays the value of a new vehicle if an insured’s vehicle is involved in an accident and declared a total loss within one year of purchase or 15,000 miles, whichever is sooner, and Deductible Dividends, which automatically reduces an insured’s collision damage deductible by $100 and will reduce the deductible $100 further at each annual renewal, up to a maximum of $500, for each year a policyholder goes without a chargeable accident.
Other features of Connections Auto will include the ability to purchase stand-alone endorsements such as Loan/Lease Gap Coverage, which covers the difference between what a policyholder owes on his or her auto loan or lease and what the vehicle is worth before it is totaled.
Source: The Hanover
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