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Massachusetts Miracle by Unknown May 6, 2008; Page A22 Remarkable news from Massachusetts, of all places. Car insurance premiums are going down. For three decades a Bay State regulator has set the price of car insurance, leading to an annual tussle between insurers and consumer groups over the size of the increase. This led to some of the highest insurance rates in the country. Because there was no price competition, some of the biggest insurers wouldn't do business in the state. During this exercise in central planning, the number of insurers dropped to 18 last year, from more than 70 three decades ago. But as of April 1, the state government decided to try a little experiment in the free market. We do mean little – proposed premiums must still be filed with the regulator, who can approve them or not. And many factors used to set rates in other states – such as credit history – are barred. Even so, this modest experiment in price competition is already working to reduce costs for consumers.
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This note was uploaded on 02/19/2011 for the course AGEC 217 taught by Professor Deboer during the Fall '08 term at Purdue University-West Lafayette.
- Fall '08