Seen in Insurance Journal:
Overall, Fitch said it expects the new system will benefit both consumers and the marketplace. “Consumers will benefit the most from a wider choice in carriers, innovations in coverage and lower rates for the average consumer,” Fitch says.
However, Fitch maintains that Massachusetts insureds would benefit even more if underwriters were permitted to use credit scoring and other “actuarially significant pricing variables that are believed to adequately reflect risk and have demonstrated value in other markets.”
The state-imposed limits on so-called tiered pricing will discourage national carriers that do not now write in the Bay State from entering the market like they did in New Jersey, the report maintains. Until carriers are allowed to use sophisticated pricing models including credit scores, Fitch predicts that “the entrance of new participants will be more of a trickle than a flood.”
I agree the sentiment, but I suspect that Fitch doesn’t give sufficient weight to the political realities of the situation.
If Massachusetts had moved to complete deregulation without a phase-in, the market shock would have caused the same sort of public uproar which doomed the prior attempt at deregulation. And, considering the strength and attitude of Bay State consumer advocates, regulatory tolerance of features such as credit scoring would have lead to a legislative derailment of even this modest deregulation.
Yes, a fully deregulated marketplace would likely net consumers additional benefits…but any deregulation is better than failed deregulation.