Why is there no competition amongst Massachusetts auto insurance?

Why is there no competition amongst Massachusetts auto insurance?

I have to write a term paper about a state, local, or federal issue and I'-ve decided to write about why massachusetts is the only state in the coutry that will now allow any competition amongst auto insurance providers. It'-s an issue amongst drivers state-wide and Im wondering if anyone knows anything about this obscene policy that might help me put this puzzle together. If anyone has any websites or just general knowledge that may help me, I would appreciate it.

ernesto

Will the last insurance company in Mass please turn out the lights when they leave? I work at a small auto insurance company and when I want to cut the tension in a meeting, I suggest we sell in Massachusetts- breaks 'em up every time. Even GEICO sells in 49 states, everywhere but Mass.The Mass insurance commissioner & legislature only allow 1 policy the be sold and sets rates that insurers can charge. Mass drivers have no real incentive to keep a clean driving record and companies have no incentive to find good drivers. The 15 or so auto insurers in the state like the way things work so pay big $$ to the legislature to keep things the way they are. Once in a while someone brings up the 'reform' word and kick it around but nothing ever really changes.In ten words or less, overregulation of the industry. No competition, no cost controls. Mass has 15 companies competing, Ohio has over 600.Try insurancejournal.com and search for Mass & auto- there are lots of articles.Source(s):http://ohio-insurance-forum.blogspot com/

fcas80

Previous poster is correct. Let me add some things.This has been going on for at least 30 years in Massachusetts. The Massachusetts legislature has decided that if insurance companies are left by themselves to determine prices, that prices will be outrageously high. So the legislature has decided that the government will set the rates for all insurance companies. Everyone thinks their insurance rates are too high, but when the government steps in, the price is set lower than insurance companies would set it. Insurance companies do not think they are too high. If the government sets the price too low, companies will not willingly compete.In any other state, if I set my insurance price too high, another company will come in at a lower price and take my business away. Free competition prevents me setting my prices too high.In most any other product, free competition sets the price. If I charge too much for a newspaper, a music disk, a carton of milk, a college education, someone else will price it cheaper and take my customers away.Many insurance companies have taken their ball and gone elsewhere. GEICO for example writes auto insurance in every state except Massachusetts.

mbrcatz

Because, the insurance commissioner sets the rates. It's a policital issue. No website reference, but I sold auto ins. in MA for years and years.See, companies were "unofficially" redlining certain areas (can you say, Boston, Jamaica Plains, Worcester) making auto insurance EXTREMELY difficult to find for a lot of drivers in some VERY high risk areas (MA has a LOT of auto insurance fraud, too, with staged accidents and such). Couple that with a few Kennedy accidents (just kidding), and other people driving drunk, the "politicians" decided rates would be set by the state.Now, that means, no matter HOW horrible a driver you are, if you have a license, there is a MAXIMUM premium that you pay out. So, the guy with 2 dui's pays the same as the guy with 10 dui's, and a vehicular homicide. THAT means, that the GOOD drivers subsidize the bad drivers, more than usual.And because you're not allowed to NOT write an auto policy when someone asks you to, the companies AREN'T allowed to "pick and choose" which drivers they write - making it MUCH harder to make a profit on auto insurance. Additionally, you have to use the state form.SO, the natural result is, what, SIX companies writing auto insurance in MA. And they do it because in order to STOP writing auto insurance, they have to pay BILLIONS to the state. So although they lose a ton of money writing auto, they'd lose even more by leaving the state.ps. Progressive doesn't write there, either.Source(s):agent, 21+ years

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