Peerless Insurance, which led a wave of insurers fleeing the state's heavily regulated market in the 1980s, said yesterday it plans to be the first new insurer to enter Massachusetts as the state introduces auto insurance competition on April 1.
Insurance Commissioner Nonnie S. Burnes lauded the move by the Keene, N.H., company as evidence that consumers will benefit from managed competition. After all, regulators had hoped competition would attract new insurers and drive down premiums for all drivers. But according to a bulletin written by Burnes this month, it appears Peerless would have to offer the same rates and classifications as its parent company, Boston-based Liberty Mutual Group, the state's fourth largest auto insurer.
"All insurers within an insurance company group will be required to offer the same rates and classification plans for Massachusetts private passenger motor vehicle insurance policies," Burnes wrote in the bulletin.
Burnes said yesterday that she couldn't comment on whether Peerless and Liberty would be able to set different rates and classifications because they had not made official filings and she had not examined their corporate structure.
"All the new companies coming in - and I hope there will be more - are going to have to follow the same rules as everybody else does," Burnes said.
Glenn Greenberg, a Liberty Mutual Group spokesman, said Peerless "hopes to charge their own rates and products like they do in every other state in which they operate head-to-head with Liberty Mutual."
Greenberg said the company plans to file its rates with the state in February and begin offering both auto and home policies by the second quarter of 2008. He said that even if Peerless cannot file its own rates, it "does not at all lessen the excitement" about entering Massachusetts and would increase competition in the state.
Next year will be the first time in 30 years that Massachusetts has had auto insurance competition. Currently, regulators approve one set of rates for one standard policy, and companies are virtually indistinguishable from one another. Regulators hope that under the new system, auto insurers will be forced to compete by lowering their rates and offering beefed-up services: The more insurers competing, the better for consumers.
But Stephen D'Amato, a consultant to the Center for Insurance Research in Cambridge, said that Peerless's entrance into the Massachusetts market would be a "nonevent."
"It's essentially the same insurer," as Liberty Mutual, he said. "It doesn't really reflect an increase in the number of insurance companies on the market."
D'Amato added that even if the companies were able to set different, competitive rates, "that would present real problems and would appear to circumvent an important consumer protection" because companies could set up multiple subsidiaries to dodge ratings regulations.
Peerless already offers its policies in New England, New York, and New Jersey. The company wrote $70 million in commercial insurance premiums in Massachusetts last year, through 150 agents.
Peerless sells its policies through insurance agents, and Liberty Mutual sells auto insurance directly to consumers - meaning consumers would have more options about how to purchase insurance.
"It's the beginning of an opening up - new competitors coming in and more choice for consumers," said Gary Gregg, president of Liberty Mutual Agency Markets.
Burnes agrees. "I think the more variety we get," the better, she said. "This is kind of an inch of progress - we're seeing another company interested in coming into our market."
But yesterday, Attorney General Martha Coakley released a bulletin to insurance companies reporting a preliminary review of an advisory filing by an industry trade group that represents insurers that serve less than 1 percent of the market and called it "a disappointing beginning to the managed competition process."
Coakley, who will review rate filings starting Monday, noted that the advisory filing would allow companies to increase their profits more than the commissioner permitted last year.
"It would be unfortunate," she wrote, "if the companies were to view managed competition as a way to increase the profits in their rates rather than to compete by lowering prices."
Carolyn Y. Johnson can be reached at cjohnson@globe.com.
