Auto insurance companies and the state attorney general are prepared to recommend the state Division of Insurance cut the rates used to set premiums by at least 3.7 percent in 2007, following an 8.7 percent reduction in 2006.
The Automobile Insurers Bureau today will ask the Division of Insurance, which sets what insurers can charge drivers, to cut those rates by 3.7 percent.
If approved, it would be the third consecutive year the state has cut rates. A final rate decision is due Dec. 15, and those rates go into effect April 1, 2007.
The bureau, which represents insurance companies, is asking for the reduction because costs - the claims they pay out to policyholders - are going down, said Daniel Johnston, president of the Automobile Insurers Bureau.
Fraud fighting efforts by Lawrence and other communities is a major reason for falling claims, Johnston said.
Lawrence and six other communities with auto insurance fraud task forces saw claims drop $192 million from 2003 to 2005, out of a statewide total of $345 million.
For that reason, Johnston said, his group is asking for Lawrence and those other cities' drivers to get a greater rate cut than what they propose for the rest of the state. Johnston said that amount has not been calculated yet.
If the Automobile Insurers Bureau proposal was approved, North of Boston drivers would save between $25 and $57 a year, assuming they have an accident- and ticket-free record and drive an average automobile, like a Toyota Corolla.
But drivers could see even bigger savings, because auto insurers do not have the final word in the state's rate setting process.
The state attorney general, who represents consumers before the insurance division, typically asks for a larger rate decrease than insurers.
Meredith Baumann, a spokesman for the attorney general, said this year will be no different.
"We intend to recommend aggressive reductions because they've (drivers) overpaid for too long," Baumann said.
Attorney General Thomas Reilly insists that drivers paid more than $1 billion more for insurance than they should have in 2004 and 2005. He proposed an 18 percent rate cut in 2005. He doesn't unveil his proposed rate cut until September.
A Division of Insurance spokeswoman declined to comment on the rate proposals.
Today's rate-setting hearing begins the process for establishing 2007 auto insurance premium rates.
Average savings*
A look at how different towns North of Boston would fare under the proposed rates from the Automobile Insurers Bureau:
City/Town 2005 premium 2006 savings
Andover $799 $29
Beverly $830 $30
Danvers $830 $30
Essex $780 $28
Gloucester $854 $31
Haverhill $983 $35
Lawrence $1,545 $57
Manchester $740 $27
Merrimac $799 $29
Methuen $1,044 $38
North Andover $799 $29
Newburyport $694 $25
Peabody 1,032 $38
Rockport $799 $29
Salem $1,101 $40
Source: Minichiello Insurance Agency
*Based on a popular car, 2004 Toyota Corolla, with a comprehensive insurance policy, owned by a good driver who can't have any accidents or moving violations in the last year.
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