Auto insurer enters Mass

By Dan Ring

02/26/2008- The Republican

BOSTON - Progressive Insurance, the nation's third largest auto insurer, yesterday said it plans to sell auto insurance to Massachusetts drivers for the first time.

Progressive, based in Ohio, said it plans to offer policies in Massachusetts starting on May 1. The company was attracted to Massachusetts by the state's new managed competition system established by the administration of Gov. Deval L. Patrick.

Peter T. Robertson, lawyer in Massachusetts for the Property Casualty Insurers Association of America, said other national auto insurers may eventually follow Progressive into this state.

Robertson said Progressive's decision is a vote of confidence in the new competitive system. Progressive gives consumers another good option, he said.

"It's a great sign that the Patrick administration's managed competition reforms are really working," Robertson said.

Starting with policies that begin on April 1, the Patrick administration is allowing auto insurers to set their own rates with strict oversight from the state. For the past 30 years, state regulators had set all auto insurance rates.

Though other national auto insurers such as Geico and State Farm still don't write in Massachusetts, Progressive's entrance has the potential for being great for consumers, said Nonnie S. Burnes, the state's insurance commissioner.

Progressive said it would offer average rates 18 percent lower than the average rates paid by Massachusetts drivers last year.

"That sounds pretty good to me," Burnes said yesterday in a phone interview. "I don't know of any consumer expenses going down, much less by that much."

Last year's statewide average auto insurance premium was $899.

Burnes said she wants to convince other giant auto insurers that Massachusetts has a stable and enticing market for them.

Burnes' regulations currently may not go far enough to lure some other national insurers.

But Burnes said she doesn't have plans in the immediate future to allow the use of factors such as credit history, education, occupational information and home ownership in establishing premiums for drivers. Burnes currently is banning the use of such factors.

Burnes said managed competition is offering consumers more choices on rates, products and services.

Raleigh D. Floyd, a spokesman for Allstate Insurance Co. in suburban Chicago, the nation's second largest auto insurer, said the company currently has no plans to write auto insurance in Massachusetts.

"We're obviously monitoring the situation and very encouraged by what we're seeing," Floyd said.

Douglas J. Nadeau, spokesman for State Farm Insurance Co. of Bloomington, Ill., the No. 1 auto insurer in the country, said the company is keeping a keen eye on the reforms in Massachusetts and how they develop.

"The under-writing limits are substantially different than many U.S. auto markets," Nadeau said, referring to the Massachusetts market.

Rhode Island and Massachusetts are the only states where the company doesn't offer auto insurance, Nadeau said.

Cristy C. Cote, a spokeswoman for Progressive, said the company will initially offer auto insurance in Massachusetts through the company's Internet site, pro gressive.com. By the second quarter of next year, the company expects to offer products through agents, she said.

She said the fastest way to enter the market would be over the Internet. The company last year began selling motor vehicle insurance to businesses in Massachusetts.

She said Progressive would not have entered Massachusetts without managed competition. The company offers auto insurance in every other state, she said.

Progressive will be offering discounts to consumers who agree to do certain business over the Internet, such as signing documents on-line and paying premiums on-line from a dedicated bank account, she said.

Burnes said she doesn't know of any other insurers in Massachusetts providing discounts for electronic payments and signing of documents.