Mass. Auto Insurance Rates Climb Back Up Despite Deregulation

July 29, 2014

  • July 31, 2014 at 10:12 am
    Bay Area Bill says:
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    The article provides facts that do not lead to the conclusion that the rising rates are excessive, as the title might lead one to believe; i.e. ‘despite deregulation’. It seems the author concludes deregulation of rate should keep the rates lower than the current $964 average.

    First, the drop of rates to $831 in 2009 shouldn’t guide the rate for 2012, as inflation acts on claims & other costs over 3 years.

    Second, the $831 rate may have been due to market over-reaction, with new carriers in the state competing for ‘new’ business. New business must often be ‘bought’ from competitors at a discount that doesn’t yield an adequate short term return, in exchange for a portfolio that is hoped to yield adequate future returns.

    Third, there may be shifting of competitors to certain risk classes and territories that led to rate increases after their price analyses were done with recent data. Or, consistent with item two above, some of the new competitors may have come to their senses and priced ALL risks properly with their latest data, rather than blindly write new business without proper rate analysis support.

    While this is ‘news’, more information is needed for the author to draw any meaningful conclusion (i.e. the title).

  • August 1, 2014 at 12:15 pm
    Wally says:
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    I would also say that deregulation is a relative concept. In Massachusetts we went from an environment where rates were set by the state to one where they are approved. Not exactly laissez-faire.

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