Battle Over Car Insurance Rate System To Start

BOSTON -- Massachusetts drivers pay the highest auto-insurance rates in the country. Could that be changing? There's a new plan up for debate on Beacon Hill Tuesday.

NewsCenter 5's Gail Huff reported that the plan lawmakers will begin debating was proposed by Gov. Mitt Romney and it has generated some controversy, particularly among auto insurance companies.

Already, a group headed by the auto industry has produced commercials blasting Romney's plan, but drivers in Massachusetts pay the fourth-highest car insurance rates in the country and Romney says he wants to change that. The state sets one rate for all companies -- the only state to have a one-rate system.

Romney's plan would establish a competitive system, mandating a 5 percent reduction for clean drivers the first year and setting a 15 percent maximum hike for bad drivers. Drivers would have three years instead of six to wipe their records clean of violations, and there would be no automatic penalty for teenagers with clean records. If drivers receive five surcharges in three years they must undergo training or lose their licenses for 30 days.

Romney said it's time for the system to favor consumers rather than insurance companies, which he says are doing well under the current system.

"In a highly-regulated system, a few companies -- well-connected -- do very, very well indeed, and make extraordinary amounts of money and [they] will fight with everything they have to keep the system from changing," Romney said.

"The industry did have a good year, but that doesn't mean we're going to have a good year next year," said Dan Johnston of the Auto Insurance Bureau of Massachusetts.

Attorney General Tom Reilly also said profits are excessive and has called for an 18 percent reduction in auto insurance rate. He said he will also testify at the State House renewing his call for a rate reduction.

Should State Auto Insurance System Be Changed?