What You Need to Know:
- In 2008, Massachusetts deregulated its auto insurance marketplace and insurers poured into the state to offer drivers coverage.
- Average prices dived after deregulation, but the Boston Globe recently reported that they have inched back up nearly to pre-deregulation levels.
Recent figures show the average annual auto insurance premium in Massachusetts at $974, nearly the same price it was before the industry was deregulated in 2008.
Deregulation in 2008 brought insurers to the market after the state allowed carriers to set their own rates.
According to recent figures from the state Division of Insurance (DOI), auto insurance prices dropped steeply after 2008 but inched up afterwards.
There are currently 34 providers selling auto insurance in Massachusetts, according to the DOI.
Before deregulation in 2008, the state’s insurance commissioner set auto coverage rates after public hearings. In 2007, the year before deregulation, the average annual auto premium in Massachusetts was $983.
The year after regulation was lifted, that average dropped to $861.
But prices increased after 2009. They hit $974 in 2012.
In 2012, the latest year that data was available, the average premium in the Bay State jumped by 3.7 percent. According to the Boston Globe, federal statistics show that the average auto premium increase far outpaced the rate of inflation in the Boston area.
DOI officials told the Boston Globe that the pattern was similar to deregulation of other industries: prices initially dip before rising again.
That average in 2012 was still 4 percent lower than the average in 2007 and 15 percent lower than in 2005, Joseph Murphy, the state’s commissioner of insurance, said in a Boston Globe editorial published Monday. Murphy called the pre-2008 market “dysfunctional.”
Deregulation encouraged competition in the Massachusetts auto insurance market and started introducing drivers in Massachusetts to types of insurance they wouldn’t have considered before 2008, according to Murphy.
“[M]any shoppers have responded [to the competitive market] by raising their coverage limits or buying newly available, innovative products, such as accident forgiveness and roadside assistance, to protect themselves and their families,” he said.