Drivers advised to compare with care

Under competition, rates to vary widely in car insurance policies

In this new era of Massachusetts auto insurance, one thing is becoming clear: Drivers should compare policies, because rates and features are going to vary widely from company to company.

Insurance Commissioner Nonnie S. Burnes yesterday released an analysis of rate filings by the state's five biggest automobile insurers that showed a wide disparity in rates for good drivers across the state.

For example, the analysis showed that two experienced Roxbury drivers, one with a speeding violation 18 months ago, could be offered an overall 34 percent reduction on their premium from Liberty Mutual of Boston but a 5 percent increase from MetLife & Home of Warwick, R.I.

"Looks to me like they might get motivated to shop around," Burnes said of Massachusetts drivers.

The analysis of Liberty Mutual, MetLife, Arbella Mutual Insurance of Quincy, Commerce Insurance of Webster, and Safety Insurance of Boston focused only on the best rates a company was offering. So, it was unclear how many drivers in any particular area would qualify for them. Even so, Burnes said, the analysis confirmed that good drivers, no matter where they live, would benefit from competition. After all, along with rates that vary from company to company - which is a sharp departure from the existing system where state regulators set one uniform rate for all companies - the state's insurers also are rolling out a wide variety of new policy benefits.

Burnes released her analysis one day after the state's 19 insurers filed their rate plans for policies renewing after April 1. The Patrick administration is switching to a competitive auto insurance system for policies in a bid to attract more insurers to the state and to give companies more flexibility in structuring their prices and benefits. No new insurers jumped into the market on Monday, but existing insurers promised a number of new benefits and said premiums for many drivers would fall, in some cases dramatically.

Overall, insurers said premiums would drop for roughly 70 percent to 80 percent of the state's 4 million vehicles. For 20 percent to 30 percent of the vehicles, or 800,000 to 120,000, rates would hold steady or increase. The filings indicated the average statewide premium would fall 7.7 percent next year, less than what some analysts had forecast if state regulators had continued to set rates.

Insurers yesterday brushed aside concerns about the relatively small drop in the statewide average premium, saying the 7.7 percent figure was likely to change. They said the average premium should fall as consumers gravitate to lower-priced carriers and as firms amend filings on Tuesday to make them more competitive.

In its Monday filing, Arbella Mutual said its customers would receive a 6.2 percent average reduction next year, but a spokesman said yesterday that figure would be revised next week.

"We think our average number next week will become far more competitive," said the spokesman, Doug Bailey. "We think everyone's numbers will be far more competitive." Arbella, the state's third-largest insurer, also plans to roll out many new policy benefits next week to compete with those offered by other companies.

Many companies are introducing benefits, including some that reduce the impact of an isolated at-fault accident or moving violation. Hanover Insurance of Worcester, for example, says it will cut the amount of time a customer will have to pay a premium surcharge for an at-fault accident or moving violation from the current six years to three years. And Liberty Mutual is waiving the premium surcharge entirely for an at-fault accident for a customer who has had no other driving incidents for the previous five years.

Liberty Mutual spokesman Glenn Greenberg said the savings could be substantial. He said a driver in Roxbury currently would pay an additional $2,332 over a six-year period for an at-fault accident, but that cost would be reduced to $604 over six years with the waiver, a savings of more than $1,700. The $604 cost - the impact of losing a safe driver credit - could be avoided by buying additional coverage at a cost of 10 percent of the policy premium.

Most insurers also are offering improved coverage for repairs and replacement vehicles and discounts that reward longtime customers and those who purchase a homeowner's, condo, or renter's insurance policy from the company. Commerce Insurance of Webster is even offering a discount on auto insurance to consumers who insure their home with the Massachusetts Fair Plan, the state's home insurer of last resort and a major writer on Cape Cod.

Other benefits being offered by companies are more narrowly targeted. Travelers of Massachusetts, based in Worcester, is offering a 10 percent discount to any customer who drives a hybrid vehicle. Commerce says it plans to continue its 5 percent discount for members of the American Automobile Association and also plans to offer AAA members coverage for laptops, cellular phones, personal belongings, and even pets hurt in an accident.

Frank Mancini, president of the Massachusetts Association of Insurance Agents, advised customers to contact their agent if they have questions about the new era of what state regulators are calling managed competition. If that agent only represents a handful of companies, Mancini said, the customer can contact other agents to find out what other companies are offering.

Mancini cautioned that little will be known definitively about rate plans until insurers file their final rate proposals next week and regulators approve them toward the end of the year. The Massachusetts Senate also passed legislation late yesterday that would make key changes in the way companies set their rates, but its chances for passage in the House appear slim. Whatever happens, Mancini said drivers will need help sorting out all the offers.

"Each company will have its own definition of what a good driver is," he said. "Price is also not the only component of the auto insurance premium that people should be looking at."

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