The Heartland Institute published the results of its fourth annual study into the nation’s property casualty regulatory environment. This year Massachusetts again continued to grace the Top 10 Worst States on the classical liberal organization’s list but, unlike past years in which the organization gave the Commonwealth a failing grade, this year we skimmed by with a D-.
Agency Checklists wanted to find out why, after the transition to managed competition, we still have not risen in the rankings. We contacted the author of the report, Mr. Eli Lehrer, to delve a little deeper behind the Commonwealth’s score. Mr. Lehrer is the vice president of the Washington, D.C. operations for the The Heartland Institute and the National Director for the organizations’ Center on Finance, Insurance and Real Estate (FIRE.)
Here is what he had to say:
The Heartland Organization has done this study for the past four years. How has Massachusetts fared during those years, what were its past grades?
Massachusetts got an F grade the first year we did the study and has improved at least a little since then. The major reason for the change is the shift in the auto market from commissioner determined rates to a relatively open rating system.
Is the Commonwealth trending upwards, downwards or treading water?
Upwards. The market has gotten better for consumers and insurers. It’s not the best in the country but it’s no longer the worst either.
It is Agency Checklists’ impression that you think the Governor and Commissioner of Insurance have been doing a good job of opening up the Massachusetts marketplace. Are we correct in our presumption?
Yes. Gov. Patrick has appointed two good insurance commissioners.
You make mention of the work former Commissioner of Insurance Nonnie Burnes did, but she left some time ago. What is your opinion of our current Commissioner of Insurance Joseph Murphy?
I’ve never met Commissioner Murphy but his reputation is pretty good. He doesn’t seem like he’ll be a reformer in Commissioner Burns’ model but he’s doing a number of things.
Was there anything in particular aside from the credit score issue and the auto regulations that adversely affected your rating of the Commonwealth?
Politics has been a major factor.
What do you say to the agents in the Commonwealth who are not happy with managed competition as we call it here?
The market exists for consumers, not for agents. A more competitive market may give agents fewer guarantees that they will make money and more headaches. That’s too bad.
Do you see anything on the horizon for insurance in Massachusetts that you either find troubling or promising?
The attorney general’s efforts to put insurance regulations into place is both illegal and bad; if she succeeds, it will mean chaos, fewer real choices and higher rates for Massachusetts consumers.*
What would make Massachusetts rate higher on your Property Casualty Report Card? That is any specific changes?
Rates would go up if the Commonwealth were to limit the use of credit scores or, really, do anything else the AG wants.
*Attorney General Martha Coakley announced that she was withdrawing her proposed insurance regulations pursuant to c. 93A earlier this year.
With that being said, we look at the rest of the results of the 2011 Report Card. The Institute says the study is conducted, “…for the sake of consumers, elected officials and the insurance industry – in that order.” And while the company makes no apologies that its results may not reflect those in the insurance industry or in favor of protecting “consumer rights” their belief is that an “…open and free insurance market maximizes the effectiveness of competition and best serves consumers.
No state does a perfect job of regulating insurance, but some do better than others. We produce this ranking to give states a sense of what they ought to do if they wish to free their insurance markets.
In compiling its data, the organization asks two fundamental questions about the property casualty insurance products offered in each of the 50 states:
- How free are consumers to choose the property and casualty insurance products they want?
- How free are insurers to provide the property and casualty insurance producers consumers say they want?
See which state got what grade:
You can view a complete copy of The Heartland Institute’s complete report card here.