High Auto Insurance Claim Rate Raises Costs, Mass. Regulators Say

The writers at OnlineAutoInsurance.com, in a new FAQ, discuss the factors that contribute to high Massachusetts auto insurance costs.

Online PR News – 24-September-2010 – – Motorists in the Bay State pay some of the highest prices in the nation for coverage, and the reasons why provide insight into how the auto insurance industry works as a whole.

The National Association of Insurance Commissioners estimated that, of all states in 2007, the average expenditure on Massachusetts car insurance was the ninth highest, with the average policyholder spending nearly $1,000 for coverage.

Although much has changed since 2007 — large reform measures took effect in 2008, shifting the state from a fixed market to one of “managed competition” — the state’s Office of Consumer Affairs and Business Regulation acknowledges that residents still have “some of the highest auto insurance costs in the country.” One of the major reasons for this is the state’s being one of the most densely populated. Urban areas with greater population density have statistically been shown to have higher crash rates; and, consequently, these areas also have greater rates at which property damage and bodily injury liability claims are filed.

Source: http://bit.ly/coZ8iE

According to the Insurance Information Institute, urban areas and “central cities” see higher crash rates because they have greater traffic density and — especially in urban areas in the Northeast — pre-automobile-era street designs.

All of this is to say that insurers who provide coverage to sections of the population with higher claims rates may have to pay more in the end in order to cover the sum of all of those policyholders’ claims. After all, coverage providers must balance the amount they pay in claims with the amount they collect through premiums, and they go to great lengths to do so.

To read more about factors influencing Mass. premium prices and how managed competition has affected the market, consumer can go to http://www.onlineautoinsurance.com/ to access the full FAQ.

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