Progressive Insurance, the nation's third-largest auto insurer, will begin offering auto insurance to Massachusetts drivers May 1, the company said.
Progressive said it wanted to enter the Massachusetts market quickly under the new managed competition system put in place by Insurance Commissioner Nonnie S. Burnes.
"We appreciate the work the division has done to create a regulatory environment that allows companies to compete for customers," said Cathy Wilton-Bransch, Massachusetts product manager for Progressive, in a statement.
Burnes said Progressive's presence in the state will benefit consumers.
"This validates that if we loosen up this market, there will be more people interested in selling here," she said. "It's a very good thing that Progressive has decided to come here. There will be substantial choices in rates and products."
Progressive, which claims to sell more insurance through agents than any other company in the United States, already sells commercial auto insurance in Massachusetts. Starting in May, individual consumers will be able to purchase policies through the company's website, progressive.com.
Next year, it plans to put in place a network of agents for consumers who prefer to buy policies through a local agency. There is likely to be a difference between the prices of policies purchased directly through the company on its website and those purchased from agents.
The firm, based in Mayfield Village, Ohio, said its rates will be 18 percent lower than the average rates paid by Massachusetts drivers in 2007, although it did not provide a dollar figure.
Burnes undertook an overhaul of the state's auto insurance market shortly after she became insurance commissioner in February 2007.
Previously, auto insurance rates were set by the Division of Insurance, and insurance companies had little flexibility to vary from the approved prices. Under the new system, however, companies set their own rates, which go into effect unless they are challenged and disallowed by the insurance commissioner.
Drivers whose policies renew April 1 will be first to pay the lower rates set under the competitive system. Many insurers have already sent out renewal notices for drivers whose policies renew in April, and competition for business is expected to be strong.
Proponents of the so-called managed competition celebrated Progressive's move. They have long claimed that the new system would draw additional companies into the Massachusetts market.
"This is huge," said James T. Harrington, executive director of the Massachusetts Insurance Federation, an industry group that supported deregulation. "It's a big win for Massachusetts auto insurance customers. Progressive's decision could simply be the first of many new market entrants transforming consumer opportunity."
But one consumer advocate had a different take on Progressive's arrival.
"The Division of Insurance and the large national insurers worked closely together to implement a version of competition that strips away consumer protections and enriches the insurers at the expense of the public," said Stephen D'Amato, a consultant at the Center for Insurance Research in Cambridge. "It would be surprising if companies such as Progressive didn't want to follow up and collect a piece of that action.'
Twenty companies now offer auto insurance in Massachusetts, including one firm that operates under separate names. Burnes said between five and 10 companies have expressed an interest in selling auto insurance in the state. She declined to name them.
Progressive was founded in 1937. The company, which sold $13.8 billion in auto insurance policies last year, calls itself an industry innovator. For instance, last year it became the first insurance company to offer coverage for injuries suffered by pets in automobile accidents. It pays up to $500 for veterinary bills for dogs and cats. The protection is included at no additional charge for customers who buy collision coverage.
The Division of Insurance recently launched a website, autoratecompare.doi.state.ma.us, that provides drivers with range of representative prices under the new system after they supply basic information about their vehicles and driving habits.
Jeffrey Krasner can be reached at krasner@globe.com.
