Auto Insurance Reform Deserves Support

The automobile insurance market in Massachusetts is a disaster and Gov. Mitt Romney's plan to reintroduce competition among insurers is a step in the right direction.



Drivers in Massachusetts pay the fourth-highest insurance rates in the nation. Yet relatively few companies want to do business here. While more than 100 insurers offer policies at competitive rates in nearby states, poor driving records and state-controlled rates have driven out all but 19 in the Bay State.



If you own a car or truck, you know how much it costs to insure it — hundreds, if not thousands, of dollars ever year. Parents dread the day their children become old enough to drive, knowing how much their inclusion on the policy will hike those annual premiums. And heaven forbid you have an accident or are cited for a moving violation.



Up in Lawrence, where fraud has driven rates even higher than in most places, drivers can pay as much as $4,000 a year for car insurance.



Romney wants to end what he called a "Soviet-style" insurance industry in Massachusetts. That's not an entirely accurate description on the governor's part, for industries in the old Soviet Union at least looked well-run on paper.



Romney has proposed a kind of regulated deregulation for the insurance industry. (See his column on today's Viewpoint page.)



Under his proposal, insurers would set their own rates — to a point. They would be required to lower rates for the state's best drivers by at least 5 percent. Those drivers account for 64 percent of the four million insurance policies in the state. Insurers could raise rates on drivers with poor records, but by no more than 15 percent.



The plan effectively eliminates the subsidies good drivers pay to support lower rates for poor drivers. In other words, drivers would pay rates that more closely reflect the cost of insuring them.



Romney also wants to increase the threshold for filing lawsuits for pain and suffering. Medical bills must exceed $2,000 before a lawsuit can be filed. Romney would raise that to $4,000. He also seeks a limit of 10 visits to nonmedical practitioners such as chiropractors.



These are moves that will help curb insurance fraud and reduce the number of nuisance lawsuits filed.



Other aspects of Romney's plan are less helpful and smack of government meddling in what should be business decisions. Among these is a plan to assess insurers $700,000 annually to pay for police anti-fraud efforts. That's a bill insurers would pass on directly to drivers. Romney also wants to replace no-deductible windshield replacement with a $100 deductible plan. That's a decision we'd have insurers, not the governor, make.



The heavily Democratic Legislature will no doubt be tempted to turn this proposal into an opportunity for partisan sniping at the Republican governor. Instead, they should take the opportunity to do something constructive for their constituents and work toward a market-based auto insurance system for Massachusetts.



Because anything that brings competition back to the insurance business and holds the promise of lower rates for good drivers would be most welcome.