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Browsing for a better auto insurance deal

Consumer site rolls out today

Email|Print|Single Page| Text size + By Jeffrey Krasner
Globe Staff / February 17, 2008

Drivers, start your engines.

For the first time in 30 years, Massachusetts motorists can today start comparison shopping for competitively priced auto insurance.

The Division of Insurance has launched a website - mass.gov/autorates - that allows consumers to get competitive quotes from the roughly 20 companies that sell auto insurance in the state. The average driver could save $200, according to Insurance Commissioner Nonnie S. Burnes. She wants drivers to spend the time to get the best deal.

"We don't want people to be apathetic about this," Burnes said. "They need to challenge their agents and get the best deal possible."

She said drivers could see premiums go down by 10 percent even "before they start seriously shopping for discounts."

The website is intended to help consumers navigate the confusing world of competitive auto insur ance. Drivers can quickly input some basic data to get price quotes. The format includes questions about a driver's home address, how many miles they drive, how long they have been driving, what type of car they own, and driving record information. The Web tool quickly returns representative rates.

"We are excited about this new website because it signifies the beginning of a dynamic, competitive insurance market," said Vin Nieroda, Massachusetts head for the Hanover Insurance Group in Worcester. "For the first time in over 30 years, consumers will be able to compare companies, pricing, and coverage as they choose their auto insurance."

Massachusetts was the last state in the country to have auto insurance rates set by regulators. Companies had little flexibility to vary from the established rates, so comparison shopping didn't lead to significant savings.

Burnes, who became insurance commissioner a year ago, pushed for a sweeping change to "managed competition." She has swept aside concerns of Attorney General Martha Coakley and other consumer advocates who warned that the new system wouldn't adequately protect consumers and ensure the fairest rates.

This week, insurance companies started sending out renewal notices for drivers whose policies expire April 1 - the start of the year in the insurance industry.

Those who visit the state website will see enormous variations in prices. For instance, a Dorchester driver licensed for 25 years who logs about 12,500 miles annually on a 2005 Honda Accord - and has had a speeding ticket within the past year - will see annual premiums vary from $1,214 to $1,513. By comparison, the same hypothetical driver, without the ticket, would have a range of $1,005 to $1,247.

From the list of estimated premiums, a consumer can visit company websites by clicking on their names. Similarly, click on "find an agent" to connect to a list of agents that sell insurance for that particular firm.

"Auto insurance used to come in one flavor, vanilla," said Frank Mancini, the president of the Massachusetts Association of Insurance Agents. "Now you can get vanilla with sprinkles or hot fudge or a combination of toppings."

Mancini said independent agents, who sell about four out of five auto policies in Massachusetts, offer consumers easy comparison shopping, because each agent may represent several companies.

But along with choices will come complications. Drivers seeking to get the best rate will have to sort through many variables. Some companies are offering "loyalty" credits for longtime customers. Others are offering discounts if a customer also buys homeowner's or renter's insurance. Some will entice drivers with "accident forgiveness" plans, in which the first at-fault accident won't count toward higher premiums. And several firms will offer discounts for hybrid vehicles.

Meantime, insurance companies are startling their own marketing efforts, seeking to attract as many good drivers as possible. Drivers with clean records will earn the highest profits for companies.

Billboards for auto insurance are already popping up. Many of the largest companies are planning extensive ad campaigns. Some have launched programs to make it easier for consumers to quit their existing policies before they expire, and switch companies. For instance, many insurers charge a penalty if the policy is canceled early. Some firms will now pay those penalties.

"This is a very good start for competition," said James T. Harrington, executive director of the Massachusetts Insurance Federation. "Insurance companies will be aggressively marketing their competitive rates and policy enhancements over the next several months, so it's important that consumer pay attention as companies compete to retain and attract business."

Jeffrey Krasner can be reached at krasner@globe.com.

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