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NEWS RELEASE
Jun 01, 2005


CONTACT: Carmen Balber (617) 790-0707 ext. 324

Romney's Auto Insurance Plan Would Make Mass. System Worse for Consumers

Repeal Of No-Fault, Strong Regulation, Needed To Lower Drivers' Rates
Santa Monica, CA -- Consumer advocates with the Foundation for Taxpayer and Consumer Rights (FTCR), a national insurance reform and consumer protection organization, condemned the auto insurance proposal released by Governor Romney today for failing to address the two main problems of the Massachusetts insurance market -- a no-fault liability system and weak regulation of insurance companies -- that make Massachusetts one of the most expensive insurance markets in the nation.

A study released by FTCR in Boston in March found that no-fault auto insurance is consistently more expensive than traditional personal responsibility insurance and that its repeal would save Massachusetts drivers a collective $200 million annually.

"You can't fix a broken system by making it more harsh. Governor Romney's proposal would intensify Massachusetts' failed no-fault auto insurance system -- it's like rebuilding the Titanic at double the size," said Carmen Balber, consumer advocate with FTCR.

"The plan would also strike a blow to Massachusetts' already lax insurance regulation by allowing insurers to change rates without requiring them to justify the changes. Giving insurers more 'flexibility' in setting rates without requiring they justify the propriety of those rates is a license to steal," said Balber.

"Romney's proposed rate rollback for good drivers is a cynical tactic designed to draw attention away from the plan's failures. Although good drivers deserve a rollback, their savings would be short-lived under the governor's plan because it fails to fix the no-fault system that causes rates to be high in the first place. When New Jersey legislators implemented a similar rate rollback it was wiped out by rate increases within three years because the rollbacks did not change the underlying problems inherent to New Jersey's choice no-fault insurance system," said Balber.

FTCR's study showed that no-fault auto insurance is consistently more expensive than traditional personal responsibility insurance and detailed the importance of a strong insurance regulation system in the effort to lower insurance rates. Among FTCR's findings:

- Insurance premiums are 37% higher in Massachusetts, the first state to enact a no-fault law, than in California, a personal responsibility state that enacted strong rate regulation in 1988.
- In states that repealed mandatory no-fault laws, motorists experienced significant average premium savings: $145 lower in Connecticut, $76 lower in Georgia and $156 lower in Pennsylvania.
- Premiums are 19% higher in no-fault states than in personal responsibility states.
- Seven of the ten states where auto insurance was most expensive in 2002 had no-fault or hybrid/choice systems.
- States with some form of no-fault insurance are consistently a majority of the highest priced states in the nation, forming six to eight of the top ten every year since 1989.

Click here to read the study.

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