In Massachusetts auto insurance rates are set by the Insurance Commissioner and not the individual insurance companies.

Under the current MA 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.

We were able to find information on the news story you heard regarding the Massachusetts auto insurance rate decrease for 2007. On December 15, 2006 the Massachusetts Insurance Commissioner, Julianne M. Bowler, announced the decision in the 2007 private passenger insurance rate case that results in a statewide average rate decrease of 11.7 percent next year. The new rate takes effect April 1st and translates to an average decrease of $119.61 per vehicle and a statewide average annual rate of $898.81.

The statewide average rate increase or decrease authorized by the Commissioner is based on the existing rate at the time insurers make their rate request, typically in August of each year ($1,018.42 as of 8/11/06).

This rating decision by the Insurance Commissioner marks the third consecutive year that rates have been cut for auto insurance. This year's rate cut saves Massachusetts drivers 479million dollars and is the largest rate decrease since 1978.

The Governor of Massachusetts has noted that he believes the state can do even more along these lines if they commit to reforming the system to make it more competitive, which will lead to even greater rate deductions and savings.

The Director of Consumer Affairs &Business Regulation, whose office oversees the Division of Insurance(DOI), has stated that while this rate decrease is good news for Massachusetts drivers, it is not along-term solution to the problems that plague the state's system. The director goes on to say that DOI's analysis of the 2007 rate case resulted in the upcoming rate decrease for consumers as well as an appropriate and adequate rate for those insurers who still write insurance in the Massachusetts private passenger insurance market.

As a result of enactment of Chapter213 of the Acts of 2004, the rate approved by the Commissioner now in December 2006 will be effective April1, 2007 instead of the normal January 1 start date. The new law allows insurers to have time to calculate the rates resulting from this decision so that April bills will include the new rate approved by the Commissioner and reduce insurer expenses associated with provisional billing.

It should be clarified that the average statewide rate does not necessarily reflect what any one policyholder will pay for premium in 2007. Actual premium is dependent on the types of coverages and deductibles chosen, number and types of vehicles insured, SDIP records and driver classifications, territorial assignment and any discounts applied.

So those starting policies or renewing their MA car insurance in January through March of 2007 are unfortunate in that the rate decrease is not taking effect until the First of April due to the reasons the DOI listed above. To find out more information regarding the rate decrease and to see what policy holders renewing earlier in the year may due to reduce their rates, try contacting the MA Division of Insurance.