Dead Bloggers Society: Is Governor Romney's Insurance Reform Plan "Bad" for Massachusetts?

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November 12, 2005

Is Governor Romney's Insurance Reform Plan "Bad" for Massachusetts?

If nothing else, the scare tactics of the Massachusetts Coalition for Affordable Auto Insurance have given some of us a wake up call this week.

In between Don's rantings on WXTK during the commute to work on Wednesday, I heard an advertisement explaining that Governor Romney's auto insurance reform plan is “bad.” This coalition of auto insurance companies and agents “home grown in Massachusetts” (sounds like they are aligning themselves with cranberry growers) is actively attacking the Governor's plan, even insinuating that the plan would somehow be helping to pay Romney's way to a higher office in Washington. The advertisement claims, among other things, that Romney's plan would raise rates for:

* Families with teen-aged drivers
* Young drivers starting out on their own
* Renters
* Those carrying a balance on their credit card
* Blue collar workers
* Drivers in all of Massachusetts' cities

by over $5,000 in many cases...

If Romney's plan would cause these increases, I would like to see or read some facts telling me how this would result. Evidence supporting these claims is mysteriously absent from all of this group's propaganda. Families with teenage drivers and young drivers starting out on their own already pay far higher premiums than the rest of us- I don't see any change there. I can only assume they are making the rest of these claims based on questions asked of drivers in other states when purchasing insurance. The $5,000 claim must be based on someone having the worst driving record- the people that should be paying out the nose. In unregulated states, there are typically many more questions asked of potential customers that can range from what you do for work to whether or not you graduated from college. Perhaps prejudicial questions such as these should be banned here, but keeping companies that ask them elsewhere out of our state is not the solution. In other states they are entitled to factor in whatever they deem necessary into figuring your risk and rates. However, if their rates are not competitive, you are free to take your business elsewhere.

The current system does not allow us the same advantages offered our fellow citizens in other states. By discouraging national companies from doing business here we are prevented these options. The opponents of this bill argue that addressing issues of high accident rates and poor roadways will help lower premiums while preserving our current system. They also claim that the current system benefits us, the consumers. “If it ain't broke, don't fix it,” they say. Excessively high accident rates, poor roadways, and lack of public transportation obviously need to be addressed in many areas. However, we are still left with one important question. If the current system is working and set up to protect consumers, how do we explain annual premiums that are fourth-highest in the nation?

What confuses me most about the Mass. Coalition's campaign against free market insurance is that MASSPIRG, our state's most prominent public interest advocacy organization, has thrown their support behind this group. I am having a hard time understanding how consumer advocates who previously chastised a similar insurance group for statements they made in their advertisements is now supporting a group making blatant political remarks and false, unsupported claims in theirs. I am certainly no expert on insurance, but in examining the evidence I have found, I can not see how Romney's plan would hurt us as consumers. As a matter of fact, although the evidence is not overwhelming, it seems the Governor's plan would benefit the majority of good drivers, bring us a broader selection of insurance products and potentially bring fair, affordable insurance companies back to Massachusetts.

There is obviously more than one side to this debate. In supporting the Governor's plan, we may simply be choosing between the lesser of two evils. However, our power to choose as consumers would be given back to us. That local insurance companies prefer the status quo should not be the determining factor. It is obvious why local insurance companies would be against this plan- more work dealing with more companies for private agencies and less of a monopoly for local companies. I am disappointed that MASSPIRG would allow themselves to be sucked into their selfish endeavors. Massachusetts based Commerce Insurance Company, the 27th largest writer of personal automobile insurance in the United States is the driving force behind the campaign against Romney's plan. The Code of Ethics on Commerce Insurance Company's web site states that:

In accordance with law, the Companies shall not directly or indirectly give, pay, expend or contribute, or promise to give, pay, expend or contribute, any money or other valuable thing for the purpose of aiding, promoting or preventing the nomination or election of any person to public office, or aiding or promoting or antagonizing the interest of any political party.

Apparently this code of ethics does not apply to their fierce opposition to Governor Romney or this plan.

It is obvious that the current system is in need of reform. We deserve more options, and attracting national companies back to Massachusetts may be the best solution. We have gone from fifty-three companies offering auto insurance here in 1990, to nineteen today. Here on Cape Cod, we may also have additional incentive to support the Governor's measure. Many insurance industry officials suggest that the Governor's plan would attract insurance carriers back to the state who would also offer homeowner’s policies at more reasonable rates. The Governor's plan may prove to have additional benefits for us, with our current homeowner's insurance crisis. For Massachusetts' drivers and coastal community homeowners, anything would be an improvement.

Comments

I do not profess to be knowledgable enough to debate the intricacies of the insurance industry. MASSPIRG'S endorsement of an obviously biased insurance industry group made me nervous enough to check out the facts, as we all should. There isn't much there for the average consumer to see or analyze. That their ads make political claims caused me to be all the more doubtful of their motives.

If this is a simple matter for consumers of "if it aint broke, don't fix it," I do not understand the need for political jabs and the obvious desperation of Commerce insurance in this. If the status quo is so beneficial to the consumer, why the exaggerations and politicizing?

Posted by: Drew at November 12, 2005 09:11 PM