The many faults of no-fault insurance

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The Brockton Enterprise

Did you have any doubt that Massachusetts has the worst auto insurance system in the country? If you did, read a new report from the California-based Foundation for Taxpayer and Consumer Rights, which points out all the faults of no-fault insurance.

Massachusetts is one of a dwindling number of states that clings to this wasteful system, in which insurers cover costs for their own customers, no matter who is at fault for an accident. Couple this with Massachusetts being the only state in which government regulators set auto insurance rates and you have a system that is broken beyond repair.

The only states with higher auto insurance rates are New York and New Jersey, with Massachusetts at third, with an average rate of $624 per year. All three are states with no-fault insurance. The report found that insurance premiums in no-fault states are 19 percent higher than in states with “personal responsibility” insurance and that rates in these went up nearly twice as much each year from 1998 to 2002. When states abolished no-fault insurance — as six have done in the last two decades — rates fell.

It makes no sense to have an insurance system that doesn’t provide any incentive for insurers to woo good drivers — and it turn, offer them incentives. Most of the discounts for good drivers that became popular five or six years ago have disappeared as insurance companies find they don’t have to do much to attract customers. Insurance is compulsory and rates are set by the state. So why bother with spending money as if there is actual “competition.”

Critics have called for many years for an end to the farce of having the state set auto insurance rates. Deep thinkers in government claim it is to protect drivers from being gouged by insurance companies. But that assumes drivers are sheep — stupid sheep, at that — who can’t be trusted to shop around for a good insurance company.

The state doesn’t set rates for life or home or health insurance. We also know of no other business that is run without consequences if mistakes — accidents — are made, as is the case with no-fault insurance.

Get rid of no-fault insurance and eliminate the board that sets annual rates. They do nothing but drive rates higher.

Consumer Watchdog
Consumer Watchdog
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