In Massachusetts the government mandates auto insurance coverage for all vehicles. That is fine with me, but in order to guarantee that coverage will be available to all citizens at ‘affordable’ rates the state has over time increased its role from regulation to dictatorship. Nanny state also wants to control the price of insurance. Today the state sets the rates that insurers charge, and also determines which factors are used in rate calculations. Massachusetts present policies concerning rates result in a subsidy for younger and urban
There have been 2 major long term impacts of state control. First, all major national insurance companies have stopped writing auto insurance in
GEICO, Allstate, State Farm, Progressive? They aren’t here.
They have all abandoned the auto insurance business in
This sad state of affairs is staunchly defended in a Globe editorial today entitled “Dirty auto rates? No thanks”. The Romney administration wanted to take the radical step of moving to a more market-based system. The political problem with a market-based system is that high-risk drivers will find that a competitive market price of their insurance makes it unaffordable.
The Patrick administration stopped Romney’s reform plans and created a study team to review the state’s policy. From the Globe editorial:
…the study group unequivocally defends the current system that limits rating factors to driving experience, at-fault accidents, location, and traffic violations. Massachusetts needs no part of national insurers who use credit scores, occupation, home ownership, and other extraneous factors to dump drivers into assigned risk pools where they are forced to pay outlandish "dirty rates."
Which is to say that government is more competent than private companies to judge which factors are extraneous and which factors should be used to estimate the risks of insurance coverage. Laughable! Government is able to only to oil the squeaky wheel and make sure that the overall policy is ‘fair’, as is illustrated further down in the editorial:
…roughly three-quarters of the state's drivers pay about $100 more each year for auto insurance so that mostly urban drivers living in areas with more theft and accidents can pay about $400 less. Everyone on the road benefits when all drivers can afford insurance.
Thanks for the benefits, nanny! The Globe (and the state’s) policy is that it makes sense for older and rural drivers to pay more and thus subsidize younger, urban drivers so that everybody can afford insurance. Why is this better? Is it because otherwise those high-risk drivers might have to carpool or take public transportation? But I thought the Globe wants more people to carpool and use public transportation!
It does. But it just wants them to have subsidized auto insurance at the same time.
Here is collectivist illogic in its purest form. But at least we are all being fair!
Do you suppose that is also why we have so many good drivers in Massachusetts?