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The Cost of Regulated Pricing – A Critical Analysis of Auto Insurance Premium Rate-Setting in Massachusetts

In Massachusetts, insurance companies are losing money on automobile insurance, some are paying massive penalties to leave, and almost all are ceding huge percentages of the policies. they underwrite to the residual market. More importantly, the price of insurance does not relate directly to the behavior of the driver, so higher risk drivers are not given appropriate incentives to drive with greater care. Insurance is underpriced for those drivers fortunate enough to be subsidized, by the rest.