WORCESTER -- Hanover Insurance Group Inc. yesterday kicked off a transformational week for the state's 19 auto insurers, unveiling a rate plan that would cut rates for good drivers and boost premiums for bad or inexperienced drivers.
Hanover is the ninth-largest auto insurer in the state, with 3.6 percent of the market.
Today is the deadline for insurers to file plans with the state Division of Insurance.
Hanover said about 70 percent of drivers will see rate decreases and 30 percent will see increases. Of those paying more, about 9 percent will be in line for a 10 percent increase, the maximum allowed.
The state is abandoning a 30-year-old system of state oversight in favor of so-called managed competition. Starting April 1, companies are allowed to establish their own products and prices, ending the practice of state regulators annually setting auto premiums.
Regulators are prohibiting insurers from considering income, marital status, education, occupation, homeownership, and credit history. Companies are to primarily use a driver's history.
Vincent V. Nieroda, president of Hanover's personal lines group for Massachusetts, said youthful drivers with no experience insured by Hanover will probably have a rate increase, as will drivers who have recently been in accidents or had moving violations.
Massachusetts's auto rates have dropped the past three years but the state still had the fourth-highest premiums in the country in 2005, according to the National Association of Insurance Commissioners. Massachusetts, with an average rate of $1,113, trailed New Jersey, the District of Columbia, and New York.
Hanover said about 25 percent of its drivers will have rates cut by 20 percent or more. Another 20 percent will have rates reduced between 15 percent and 20 percent.
Hanover said it would lure customers by promising to cut in half the state's six-year surcharge period, during which drivers pay penalties for at-fault accidents or moving violations.
Consumer advocates said drivers will be confused for the next several weeks, with many wrongly assuming they're a "good driver" entitled to deep discounts.
The rate changes to be announced today by most insurers should be judged against an expectation that under the old system, premiums would probably have fallen for all drivers in 2009, perhaps by as much as 9 percent, said Stephen D'Amato, a consultant to the Center for Insurance Research in Cambridge.
