When I was running for state rep in ’04, one of my “stump speech” issues was auto insurance. I talked about how the law permitted the insurance commissioner to annually make a formal declaration that competition for insurance in Massachusetts was impossible, and then fulfill the prophecy by imposing price controls. I talked about how it resulted in higher insurance prices for most car owners. I also talked about how the state was forcing good drivers to subsidize bad ones, how people making riskier choices were being subsidized by people making safer choices.<\/p>\n
I am, of course, delighted that Governor Deval Patrick’s appointee, Nonnie Burnes, has decided to open the door to competition<\/a> (well, at least crack the door open).<\/p>\n The usual set of naysayers are starting up their chorus. Check out this Globe editorial<\/a>, and then do some of the math with me. The Globe cites a MassPIRG statistic<\/a> that one million drivers will be left without choices in the new system. It notes that there are four million autos in Massachusetts. By my math, that’s claiming that 25% of drivers will be in this high-price, no-choice deadend. The editorial also relays Burnes’s statement that 80% of Massachusetts drivers subsidize the 20% riskiest drivers. Which means that . . . there are some people who are currently subsidizing other drivers, paying above market rates, that won’t find an insurer in the new system? That doesn’t pass the smell test. Everyone who gets to stop subsidizing bad drivers will enjoy rates that fall even faster than they are now.<\/p>\n