Boston, MA – (WiredPRNews.com) According to the latest figures released last month by the National Association of Insurance Commissioners (NAIC), the average expenditure on Massachusetts car insurance showed a significant decline between 2004 and 2008.
NAIC data indicate that the average expenditure on auto insurance for the state’s residents has fallen from $1,113 in 2004 to $903 in 2008, which amounts to a decrease of 19 percent.
The rate of decline reflected in those numbers is far greater than the rate of decline for the national average for coverage expenditures. During the same time period, the national average dropped by only 6.4 percent.
One important event that coincided with the sharp drop in the state’s average expenditures seen between 2007 and 2008 is the introduction of “managed competition” as a philosophy for regulating the state auto coverage market. According to the Massachusetts Division of Insurance (DOI), consumers saved an estimated $270 million on premiums during the first year alone of managed competition.
Before April 2008, the state market used what was called a “fix-and-establish” system to set rates. In this system, rates were set by the state regulator rather than by insurers themselves.
Practices used by regulators during the fix-and-establish period varied from those used by Bay State insurers today. One example of this is that the state-set rate system allowed at-fault accidents and moving violations to affect premiums for up to six years, while most insurers now allow them to affect premiums for only up to three years.
One major change brought about by the discontinuation of fix-and-establish was the influx of competitors that followed. Twelve companies, including some major insurers, have brought their business to the state since the switch.
Despite the inordinate decrease in costs, Bay State residents still pay $114 more than the national average for coverage.
To learn more about Massachusetts coverage issues, readers can go to http://www.onlineautoinsurance.com/massachusetts/ where visitors will find informative resource pages and a free-to-use quote-comparison generator that can help consumers find an affordable policy.