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Caution on car insurance

DESPITE ITS many critics, the Massachusetts automobile insurance system provides coverage for nearly all motorists in the state, offers them a choice of insurers, and reduces the actuarial disparities that cause premiums to soar for urban and inexperienced drivers. As the Legislature contemplates changes in the system next year, it should do nothing to jeopardize these strong points.

Insurance Commissioner Julianne Bowler is about to issue regulations that would remedy a defect in the system at the expense of consumer choice. She plans to change the current arrangement, which allows drivers to select whichever insurer they want but saddles insurance companies with selected agents, some in high-risk urban areas with extraordinarily high losses. Under the proposal before Bowler, the complicated system for distributing these unwanted agents among companies would be scrapped and motorists that no insurer wants to carry voluntarily would be assigned to companies randomly.

Some drivers considered high risk have exemplary driving records, but they live in densely populated areas where their neighbors file a disproportionate number of claims. They should not be arbitrarily assigned to an insurance company because of a change in regulation.

Attorney General Thomas F. Reilly, who favors the creation of an assigned risk pool, wants to help these good drivers. He proposes to exempt motorists who have no accidents or traffic violations for three years. That's a good idea, and the industry may be amenable to it, but it should not become a rationale to jack up rates to intolerable levels for those who end up in the high-risk pool.

Bowler would do better to devise a plan that compensates companies for any inequities, but she is operating under an agenda set by Romney to open Massachusetts to big national insurers that now shun the state. From their viewpoint, Bowler's change would remove an annoying idiosyncrasy. These companies also oppose the regulated rate structure in Massachusetts, which imposes relatively higher premiums on suburban and rural drivers to reduce the cost for younger or urban drivers. Premiums for drivers in the latter two categories are still much higher than average.

Changes in the rate system will require legislative approval. A task force composed of administration officials and legislators is hearing from insurance commissioners in other states who stress the merits of deregulation. The task force ought to examine the brief deregulation experience of Massachusetts in 1977, when urban rates skyrocketed.

It is worrisome that some of the smaller auto insurers are leaving the state, but their withdrawal should not prompt a major upheaval in the system. Insurance costs are not out of line given the congested roads, confusing traffic patterns, and aggressive driving in Massachusetts. And because of the regulated rates, only 7 percent of drivers here are uninsured. In Colorado, 32 percent lack insurance; in California the figure is 22 percent.

The Massachusetts system encourages all motorists, even the young and the poor, to contribute to the cost by buying insurance. The Legislature may discover that some adjustments to the system are necessary, but it should not, simply to pursue an ideology of competition, repeat a mistake of the 1970s. 

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