Auto Insurance Rate War ; Rivals Say Rules Give Progressive Unfair Edge

By JAY FITZGERALD

Progressive Insurance, the new out-of-state player in Massachusetts, is shaking up the auto insurance industry with some super-low prices – causing complaints from rivals that it has an unfair regulatory advantage.

Progressive, which entered the state in May after the historic deregulation of the auto insurance industry earlier this spring, has already made its presence felt with its aggressive online campaign to lure new customers.

The insurer is occasionally offering insurance rates 33 percent to 50 percent lower than other rivals, according to some industry sources who have carefully monitored the new “managed competition” system.

A Herald survey of Progressive’s prices – comparing staff members’ current policy rates with those offered on Progressive’s Web site – didn’t show discounts nearly as big as those found by others.

But it did show Progressive consistently undercutting some rivals by 5 percent to about 20 percent.

Frank Mancini, president of the Massachusetts Association of Insurance Agents, said insurers have definitely noticed Progressive’s aggressive campaign.

But he warned that Progressive – which currently doesn’t use independent agents in Massachusetts, though it could next year – is offering some coverage plans that customers may not find adequate.

He also said Progressive, as a new player in the state, has a two- year exemption from participating in the state’s assigned-risk pool – in which high-risk bad drivers who can’t find insurance are automatically assigned to insurers.

The exemption, which Mancini says can save Progressive about $100 to $150 on each policy it issues, is intended to attract new insurance players to Massachusetts.

Progressive rejected Mancini’s complaints, saying that it’s a new player using different risk-measurement calculations that other insurers never used under the old regulated system.

“We believe our view of the market is different from others,” said Cathy Wilton-Bransch, Progressive’s product manager in Massachusetts.

She acknowledged that Progressive had an advantage because it filed its rate proposals after other rivals, allowing it to crunch numbers and beat the competition. She cautioned that Progressive does have higher rates than rivals in some categories.

She added that its current exclusive online strategy also reduces costs.

A spokesman for Boston-based Liberty Mutual didn’t sound intimidated by Progressive.

“We compete with Progressive in other (states),” said Liberty’s Glenn Greeberg, asserting its combined prices, discounts and coverage options are among the “most aggressive” in the nation.

Originally published by By JAY FITZGERALD.

(c) 2008 Boston Herald. Provided by ProQuest Information and Learning. All rights Reserved.