Why is nearby no competition amongst Massachusetts auto insurance?
I have to write a term thesis about a state, local, or federal issue and I've decided to write roughly speaking why massachusetts is the only state in the coutry that will in a minute 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 support me put this puzzle together. If anyone has any websites or just broad knowledge that may help me, I would appreciate it.
Answers:
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 be "unofficially" redlining certain areas (can you say, Boston, Jamaica Plains, Worcester) making auto insurance EXTREMELY difficult to find for greatly of drivers in some VERY high risk areas (MA have a LOT of auto insurance fraud, too, with staged accidents and such). Couple that beside a few Kennedy accidents (just kidding), and other people driving drunk, the "politicians" granted rates would be set by the state.
Now, that means, no matter HOW horrible a driver you are, if you own a license, there is a MAXIMUM premium that you pay out. So, the guy near 2 dui's pays the same as the guy with 10 dui's, and a vehicular homicide. THAT way, 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 sort a profit on auto insurance. Additionally, you have to use the state form.
SO, the natural result is, what, SIX companies writing auto insurance within MA. And they do it because in order to STOP writing auto insurance, they hold 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 near, either. Source(s): agent, 21+ years
Previous poster is correct. Let me join some things.
This has been going on for at lowest 30 years in Massachusetts. The Massachusetts legislature has settled that if insurance companies are left by themselves to determine prices, that prices will be outrageously high. So the legislature have decided that the government will set the rates for adjectives insurance companies. Everyone thinks their insurance rates are too high, but when the administration steps in, the price is set lower than insurance companies would set it. Insurance companies do not think they are too large. If the government sets the price too low, companies will not willingly compete.
In any other state, if I set my insurance price too illustrious, another company will come in at a lower price and take my business away. Free competition prevents me setting my prices too dignified.
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 run my customers away.
Many insurance companies have taken their ball and gone elsewhere. GEICO for example writes auto insurance within every state except Massachusetts.
Will the finishing 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 stiffness in a meeting, I suggest we go in Massachusetts; breaks 'em up every time. Even GEICO sells within 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 concrete incentive to keep a clean driving transcription and companies have no incentive to find good drivers. The 15 or so auto insurers contained by the state like the way things work so wages big $$ to the legislature to keep things the way they are. Once within a while someone brings up the 'reform' word and kick it around but nothing ever really change.
In ten words or less, overregulation of the industry. No competition, no cost controls. Mass has 15 companies competing, Ohio have over 600.
Try insurancejournal.com and search for Mass & auto; there are lots of articles. Source(s): http://ohio-insurance-forum.blogspot com/
Related Questions:
Answers:
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 be "unofficially" redlining certain areas (can you say, Boston, Jamaica Plains, Worcester) making auto insurance EXTREMELY difficult to find for greatly of drivers in some VERY high risk areas (MA have a LOT of auto insurance fraud, too, with staged accidents and such). Couple that beside a few Kennedy accidents (just kidding), and other people driving drunk, the "politicians" granted rates would be set by the state.
Now, that means, no matter HOW horrible a driver you are, if you own a license, there is a MAXIMUM premium that you pay out. So, the guy near 2 dui's pays the same as the guy with 10 dui's, and a vehicular homicide. THAT way, 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 sort a profit on auto insurance. Additionally, you have to use the state form.
SO, the natural result is, what, SIX companies writing auto insurance within MA. And they do it because in order to STOP writing auto insurance, they hold 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 near, either. Source(s): agent, 21+ years
Previous poster is correct. Let me join some things.
This has been going on for at lowest 30 years in Massachusetts. The Massachusetts legislature has settled that if insurance companies are left by themselves to determine prices, that prices will be outrageously high. So the legislature have decided that the government will set the rates for adjectives insurance companies. Everyone thinks their insurance rates are too high, but when the administration steps in, the price is set lower than insurance companies would set it. Insurance companies do not think they are too large. If the government sets the price too low, companies will not willingly compete.
In any other state, if I set my insurance price too illustrious, another company will come in at a lower price and take my business away. Free competition prevents me setting my prices too dignified.
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 run my customers away.
Many insurance companies have taken their ball and gone elsewhere. GEICO for example writes auto insurance within every state except Massachusetts.
Will the finishing 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 stiffness in a meeting, I suggest we go in Massachusetts; breaks 'em up every time. Even GEICO sells within 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 concrete incentive to keep a clean driving transcription and companies have no incentive to find good drivers. The 15 or so auto insurers contained by the state like the way things work so wages big $$ to the legislature to keep things the way they are. Once within a while someone brings up the 'reform' word and kick it around but nothing ever really change.
In ten words or less, overregulation of the industry. No competition, no cost controls. Mass has 15 companies competing, Ohio have over 600.
Try insurancejournal.com and search for Mass & auto; there are lots of articles. Source(s): http://ohio-insurance-forum.blogspot com/
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