The Road to Competition

Here's a look at some of the recent milestones in the road to managed competition:

2004

May: Gov. Mitt Romney appoints a panel to look at overhauling the state's regulated car insurance system.

August: Romney's insurance commissioner, Julianne Bowler, begins to implement changes to the shared-risk pool for high-risk drivers, known as CAR, or the Commonwealth Automobile Reinsurers. The changes would drive up costs for the most inexperienced drivers and the ones with the worst track records.

September : Bowler and Attorney General Tom Reilly clash before the state Supreme Judicial Court; Reilly says Bowler stepped beyond her authority in setting car insurance rates that year.

November: The SJC puts the brakes on Reilly's case, ruling largely in favor of Bowler.

December: Bowler approves a 1.4 percent average cut in rates, the first of several straight years of rate cuts.

2005

January: Task force completes its recommendations, stopping short of calling for a complete overhaul of rates. Meanwhile, Arbella and Commerce Insurance sue Bowler over the changes to the high-risk pool, saying the changes would need legislative approval.

April: Bowler approves a change in the driver rating system that would take effect on Jan. 1, 2006, getting rid of the old "step" system that started at Step 9 with a new system that penalized drivers with points for at-fault accidents and other incidents.

June: Romney, with the assistance of Rep. Ron Mariano of Quincy, files a bill to significantly loosen the regulatory structure of the state's car insurance system and encourage more competition. The pro- competition bill received an underwhelming response in the Legislature.

Fall: Insurers on both sides of the debate fund campaign ads to support Romney's pro-competition bill or to highlight its shortcomings. Arbella and Commerce were among the few insurers to publicly oppose Romney's bill, saying it would hurt many consumers, particularly those in inner cities.

December: Bowler approves an 8.7 percent drop in average insurance rates, the state's largest rate cut in 25 years. The drop is attributed to a downward trend in claims, partly due to crackdowns on insurance fraud.

2006

January: The number of companies to offer good-driver discounts dwindles to one, Amica. Reformers such as Bowler attributed the shift, which occurred over the course of several years, to the state's strict regulatory setup that discourages competition.

May: Insurers fund another round of commercials as Romney's reform bill is about to be moved out of a legislative committee. The bill sees little progress in the Legislature for the rest of the year.

August: The SJC approves Bowler's plan to rewrite the rules for the state's high-risk pool, with new rules that would start in 2008.

October: Sen. Andrea Nuciforo, the Senate chairman of the financial services committee at the time, sends a letter to Bowler urging her to hold off on implementing the change to the high-risk pool until a new governor arrives.

December: Bowler reaffirms the rules changes to the high-risk pool. She also approves an 11.7 percent rate reduction.

2007

January: Gov. Deval Patrick takes office, replacing Romney, who didn't seek re-election so he could pursue a presidential campaign. Patrick does not re-appoint Bowler to the insurance commissioner's job.

February: Nonnie Burnes, a Superior Court judge, is appointed by Patrick to be his insurance commissioner.

March: An ad hoc panel appointed by Patrick to review the auto insurance situation recommends moving toward competition.

July: Burnes surprises many in the industry by proposing dramatic changes that would introduce what she calls "managed competition." Under Burnes' proposal, insurers can propose their own rates, but they still need to run those rates by the commissioner. The previous SJC decision gives Burnes the legal standing to move forward with changes without the Legislature's blessing.

August: Critics slam Burnes' plan, saying many good drivers will see significant price hikes once the change takes effect. Burnes is undaunted, and moves forward with the changes.

November: Burnes accepts the first set of rates under her managed competition plan. Collectively, the rate requests called for an average decrease of nearly 8 percent, starting on April 1.

November: Peerless Insurance announces it will come back to Massachusetts, although its parent company, Liberty Mutual, has been a major player in the state's auto market.

2008

February: Progressive Corp. says it plans to enter the Massachusetts market, although it plans to start with Internet sales only.

February: Burnes' Division of Insurance launches a new Web site to help consumers shop for insurance. The site generates controversy because it spits out sample premiums that often are a far cry from what consumers would actually get from the insurance companies if they called and asked for a quote.

March: Burnes issues an alert to consumers, advising them to consider taking advantage of the pending competitive market before their policy expires by canceling their current insurance policy, although she also advised them to check on any cancellation fees first.

April: Burnes' plan for managed competition takes effect for policies with an April renewal date, bringing the first true variety in auto rates to the state in more than 30 years.

(c) 2008 Patriot Ledger, The; Quincy, Mass.. Provided by ProQuest Information and Learning. All rights Reserved.

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