Auto fraud fight sends insurance rates down

Antifraud efforts are netting big auto insurance savings for drivers in some Massachusetts communities, with premiums falling 24 percent in Lawrence and 16 to 17 percent in many areas of Boston when new rates take effect in April.

The statewide average premium is slated to fall 11.7 percent to $899, but drivers in most communities where antifraud task forces have been operating will see even greater savings on a percentage basis as a result of changes made in this year's rate-setting process.

Lawrence, the first Massachusetts community to target insurance fraud in late 2003, will see the average premium drop 24 percent, falling to $1,379 from $1,815.

Drivers in Dorchester will see their average premium fall from $2,033 to $1,670, a reduction of 17.9 percent. The average premium in South Boston will fall 17.1 percent to $1,297, while in Roxbury it will fall 15.1 percent to $1,853.

The new rates apply to what insurance companies call experienced drivers, who represent the most common category of insured driver. The industry's calculations were based on a driver with six or more years of driving experience, a vehicle that is a couple of years old, an average driving record, and comprehensive and collision coverage with a deductible of $500.

"We've said that if we could take fraud out of the system, rates would come down," said Daniel Johnston , the president of the Automobile Insurers Bureau of Massachusetts. "Now we finally have proof."

The premium numbers reinforce an advertising campaign by the state's automobile insurers that says insurance fraud is out and lower rates are in. The campaign offers a $5,000 reward to anyone with information leading to the arrest or conviction of someone who has committed fraud.

Fraud can take many forms, but it typically revolves around the filing of false claims, often by staging accidents and injuries. Johnston has said the antifraud effort has led to charges against or the arrest of 528 individuals, including lawyers, chiropractors, and others involved in the schemes.

Despite an antifraud effort that has reduced claims in Massachusetts by roughly $200 million, drivers here still file almost twice as many property damage liability claims as the average American -- 6.88 claims per 100 insured vehicles compared to the national average of 3.67.

Reduced fraud has led to a reduction in claims filed with insurers, which in turn has allowed regulators to cut premiums across the state. Regulators this year decided to reward communities where task forces have had success by giving drivers there steeper reductions for bodily injury coverages.

Experienced drivers in all of Boston's neighborhoods will see reductions greater than the statewide average except those in Brighton/Allston, where rates are falling 11.2 percent to $1,241. Even there, the average premium is dropping $157.

"For a two-car family, that's significant bucks," Johnston said.

In Newton, a community where fraud has been far less of a problem, the average premium is much less, and the percentage reduction coming on April 1 is also less. Johnston said experienced drivers in Newton will see their average premium drop 8.6 percent on April 1 to $878.

Stephen D'Amato , a consultant to the Center for Insurance Research in Cambridge who is generally a supporter of the state's tightly regulated auto insurance system, applauded the reductions.

"This is exactly how the system should work, and we can lower premiums even more in the future if we apply a similar approach to reducing accidents," he said.

Some auto insurers say rates would drop even further if regulation was reduced and companies were allowed to set rates in competition with each other. Former governor Mitt Romney championed that approach, but Governor Deval Patrick has fired Romney's insurance commissioner and put some of her major changes on hold while he appoints a task force to review the situation.

An antifraud task force was launched in Revere earlier this month and one is set to start in Worcester next week, Johnston said. Task forces are already at work in Chelsea and Randolph.

Auto rates are changing this year on April 1 instead of Jan. 1. The date was moved so insurers could send final bills to all of their customers. Previously, insurers had to send provisional bills to customers renewing policies early in the year and send them final bills later after the numbers in the insurance commissioner's rate decision had been crunched.

Bruce Mohl can be reached at mohl@globe.com.