Editorial ; Insurance Reform a Long Time Comin'

For months we've been encouraging the Patrick administration to surprise us and on auto insurance, they've finally managed to do it.

Insurance Commissioner Nonnie Burnes, hand-picked by Gov. Deval Patrick, announced yesterday that she plans to move the state's auto insurance system gradually but firmly in the direction of the free market, partially freeing insurers from the stranglehold of government rate-setting.

Burnes is calling it "managed competition." Beginning next year, like every other state, insurers will be allowed to set their own rates for private passenger insurance - within limits she will establish.

Subsidies will remain in place for urban and inexperienced drivers, and Burnes promises that basing rates on, say, credit history or homeownership probably won't fly. Overall, insurance rates for the vast majority of drivers are expected to drop. Reforms are in line for the 4 percent of drivers considered high-risk, to ensure more equity among carriers.

There won't be a stampede of carriers rushing to set up shop here. But reform will surely renew interest among the 35 who have run screaming from Massachusetts since 1990. And as Burnes notes, it should inspire those carriers who are already here to innovate.

Drivers in New Jersey, the last state to deregulate, have seen a dramatic decline in rates, growth in the number of new agents and a huge drop in consumer complaints. It won't happen overnight, but at least now there's a chance that it WILLhappen.

Burnes, a former judge, conducted a meticulous review of the private passenger insurance system, from the disastrous de- regulation in 1977 to the current conditions she says are ripe for reform.

"No major issues remain in our market or in our laws to require the commissioner to fix-and-establish passenger motor vehicle insurance rates for 2008," she wrote this week.

Baby steps. But we'll take it.

(c) 2007 Boston Herald. Provided by ProQuest Information and Learning. All rights Reserved.