2008 Changes to the Auto Insurance Market

Competition-Effective April 1, 2008

For years the Commissioner of Insurance had set all automobile insurance rates under what was known as the fixed-and-established system. The Commissioner of Insurance eliminated the fixed-and-established system and introduced competition into the state's automobile insurance market for policies effective on or after April 1, 2008.

Automobile insurance companies are now setting their own rates. While these rates may vary by insurance company, all rates must be approved by the Commissioner of Insurance. Visit the Division of Insurance website to compare sample automobile insurance premiums Auto Insurance Premium Comparisons.

Under the prior fixed-and-established market, Massachusetts law required that insurance companies apply specific surcharges for certain accidents and traffic violations and apply specific credits for clean driving records. This system of surcharges and credits is part of the Safe Driver Insurance Plan (SDIP). Under the new system, insurance companies have the option of developing their own rules-known as merit rating plans-to determine if and how your driving record will impact your premium, whether it's an increase due to an at-fault accident or traffic violation, or a credit for clean driving. These new merit rating plans will be subject to approval by the Commissioner of Insurance. Companies may also choose to use the point system of surcharges and credits laid out in the SDIP as their merit rating plan.

Merit Rating Plans

An insurance company's merit rating plan adjusts your auto insurance premium based on your driving record. Merit rating plans will likely differ from one insurance company to another. For example, one insurance company's merit rating plan might offer an accident forgiveness option for your first at-fault accident under certain circumstances.

Massachusetts law mandates that no insurance company's merit rating plan shall:

  • use any at-fault accident or traffic violation that is greater than 6 years old from the policy effective date, or
  • increase premiums for at-fault accidents or traffic violations for more than 5 years

To learn more about your insurance company's merit rating plan, contact your insurance company or your insurance agent.

Safe Driver Insurance Plan (SDIP)


The SDIP Regulation, 211 CMR 134.00
  • defines the system of credit and surcharge points that apply in the SDIP, and
  • provides for the collection and exchange of private passenger motor vehicle insurance claims and traffic law violations

The specific application of surcharges and credits in accordance with the SDIP Regulation is no longer required, unless the insurance company is using the SDIP system as its merit rating plan. However, the Merit Rating Board (MRB) still collects and maintains driving records containing auto insurance claims and traffic law violations. In addition, insurance companies must continue to submit auto insurance claims and out-of-state driving records to the MRB.