In Massachusetts auto insurance rates are set by the Insurance Commissioner and not the individual insurance companies, thus not really allowing for a wide range of rates. Rate and industry regulation varies from state to state. Massachusetts, however, has some unique features that no other states have that the Automobile Insurers Bureau of Massachusetts explains below:

• Until the widespread use of discounts and deviations in 1996, there was basically no price competition for private passenger auto.

• The legislature makes laws and the Commissioner promulgates regulations and rules concerning operational activities that in other states would normally be considered company management decisions, such as:

• agent commission levels
• which agents a company does business with
• mandatory acceptance of all insurance policy applications
• the content of the insurance policy
• the content of the insurance application
• time standards and benchmarks for claim settlement
• relationships between insurance companies and body shops
• what discounts may apply and their value
• a state-level hearing process for consumers to seek waivers of surcharge points

• In other states, price competition facilitates and motivates consumers to compare companies and choose the one that best meets their needs. Insurance company control in the decision areas listed above creates a foundation for price competition which is balanced by a greater accountability to consumers. This is a more direct incentive/accountability structure, and in the long term, a more stable structure.

Under the fix and establish system of rate making, the rates approved as final by the Commissioner represent the maximum rates that can be charged for the coming year. Private passenger automobile insurance rates charged by insurers in Massachusetts are the same for every insurer.

The only way that insurers are currently allowed to compete based upon price in Massachusetts is through company deviations and discounts which are filed with the state Department of Insurance. These are the areas that allow a consumer to shop around for a better price.

Individual insurers are able to file for deviations which are applied in addition to the Safe Drive Insurance Plan (SDIP) credits that are given to drivers with excellent driving records (often referred to as good driver discounts).

Insurance companies are also able to file for discounts. Eligibility for a discount requires the insured to belong to a certain group to which a discount is offered. Examples may include teacher’s associations, employees of a particular company, or members of a social club. Discounts usually range from about 5% to 15%.