Heavy-Handed Regulation Limits Insurance Availability & Affordability:
The Massachusetts Experience

Because of a regulatory system that stifles competition, Massachusetts consumers pay more for insurance and have fewer choices.

"It is apparent from the exodus of companies from New Jersey and the refusal of many insurance companies to do business in Massachusetts that the regulatory climate for automobile insurance in those states has turned into an oppressive one...Massachusetts might be in even worse shape [than New Jersey], with two-thirds of [the country’s] 15 largest insurers either writing little or no business or refusing to do business at all in the state. Why are the people of Massachusetts denied the right to do business with the insurer of their choice? Why do they continue to tolerate a system that has driven two-thirds of the largest, most competitive providers out of the state?"
- Rep. Sue Kelly (R-NY), Chairwoman of Subcommittee on Oversight and
Investigations, U.S. House of Representatives Committee on Financial Services

"In Massachusetts, for example, in 1982 all top ten auto insurers in the state were national firms, but by 1998, only three were national...The net result is that regulation deprives consumers of choice."
- Robert E. Litan, Vice President and Director, Economic Studies, Brookings Institution

"For as long as Illinois has enjoyed good overall property-liability insurance conditions, New Jersey and Massachusetts have had bad auto insurance market conditions...heavy rate regulation in these two states has interacted with other conditions...(such as density and fraud)...to produce high auto insurance rates when compared to the national average."
- Modernizing Insurance Rate Regulation, Phillip R. O'Connor and Eugene Esposito, 2001

"Twenty-four firms have voluntarily withdrawn from the [Massachusetts] market since 1988. Only six withdrew as part of an announced strategy to reduce their automobile insurance exposure nationally; the vast majority simply withdrew from Massachusetts...Consistent with the expected combined effects of stringent regulation and restrictions on firm exit, entry into the market has been less vigorous than exit."
- Automobile Insurance Regulation: The Massachusetts Experience, Sharon Tennyson, Mary Weiss, Laureen Regan, 2002

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