The National Association of Mutual Insurance Companies has issued a bulletin applauding Governor Mitt Romney’s call for reform of the Massachusetts automobile market.
In his State of the State address, the governor blamed the state’s regulatory system for the high cost of auto insurance suffered by Massachusetts’ families. “Our system is so inefficient that most of the major national insurance companies won’t do business here. So, our premiums just keep going up,” Romney stated. “This is the year for auto insurance reform.”
Tami Stanton, NAMIC’s Massachusetts state affairs manager, pointed to the roadmap for regulatory and legislative reforms presented to Commissioner of Insurance Julieanne Bowler by NAMIC and other groups last summer as a starting place for meaningful change.
“NAMIC stands firm behind our recommendations which start with the essential overhaul of Massachusetts’ lopsided residual market system, Commonwealth Automobile Reinsurers (CAR),” she stressed. “CAR requires lower risk policyholders to pay higher rates to ensure that other, higher risk, policyholders have lower rates than justified by the risk they pose. This system distorts the market, resulting in dependencies that must be dismantled.”
“Along with significant CAR reforms, Massachusetts needs to address its status as the only statewhere the insurance commissioner has the authority to fix and establish the rates for automobile insurance, if the commissioner judges the market uncompetitive,” added Stanton. “These two reforms would go a long way in providing relief to insurers and consumers alike. For verification, Massachusetts’ lawmakers need only look to the signs of improvement in New Jersey’s auto insurance market following last year’s legislative reforms.”
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