Byline: Bob Kievra

The Progressive Corp., the country's third-largest automobile insurer, said it filed plans yesterday to sell automobile insurance in Massachusetts but would restrict sales to the Internet for at least the first 11 months.

State regulators, lawmakers and trade

But consumer advocates and an association of insurance agents preached caution and consultation, advising that the new structure requires customers to become savvy shoppers if they hope to get the right coverage at the best price.

Adding more insurers was one of the key goals for Gov. Deval L. Patrick, whose administration scrapped the former system of state-regulated auto rates in favor of permitting companies to establish their own premiums, subject to some regulatory oversight.

The state has 19 insurers writing automobile insurance in Massachusetts and state officials cited the need to attract companies such as Progressive when it made changes to the 30-year-old system of regulators annually setting a single rate that all companies charged customers.

"We have the first new entrant into the Massachusetts auto market in decades,'' Insurance Commissioner Nonnie S. Burnes said yesterday on a conference call. "That sounds to me like good news for consumers.''

Progressive said its filed rates, which must be approved by state regulators, are an average 18 percent lower than the average rates paid by Massachusetts drivers in 2007. The state cut auto rates for 2007 by 11.7 percent, producing an average statewide premium of $898.81.

Progressive said it will base its premiums on such ratings factors as the customer's driving history, the make and model of the car and the number of years the person has been licensed, among others. The company said it would also offer discounts for paperless transactions and for using electronic funds to make payments.

Many insurers offer additional discounts if a customer also insures their home or condominium with the same company. Progressive does not write homeowners insurance but said it does have a property insurance discount program. The Ohio-based company said it would initially sell its products on the Web but hopes to utilize independent insurance agents by April 1, 2009.

Progressive currently sells commercial auto insurance in Massachusetts through 100 independent agents and the Massachusetts Association of Insurance Agents expressed disappointment that Progressive would initially shun those agents.

Frank A. Mancini, president and chief executive officer of the agents association, which represents 1,600 agencies, said his organization was baffled as to why Progressive would not permit its existing commercial auto agents to sell insurance, particularly at a time of immense change.

Buying insurance is a complex transaction and conducting it alone over the Internet may not be the wisest decision, Mr. Mancini said.

"People need to make sure they're buying the proper coverage for their own situation,'' he said. "The new system has all kinds of bells and whistles and it would make sense to turn to a knowledgeable expert in the field.''

Progressive said anyone who visits its Web site but would like to utilize an agent will be referred to one of its commercial automobile agents. That agent, in turn, will refer them to another insurer, Progressive spokeswoman Cristy Cote said.

"We decided on a speed-to-market strategy, and the best way we could enter the Massachusetts market quickly was with an online product first,'' Ms. Cote said.

Under Massachusetts law, a car's registration must carry a stamp that proves the driver has automobile insurance. That function is often handled by insurance agents. Ms. Cote said the company has not yet determined how that requirement will be performed for its prospective Massachusetts customers.

Deirdre A. Cummings, legislative director for the Massachusetts Public Interest Research Group, said consumers should not be easily swayed by claims of single-digit premium reductions. Had the Patrick administration kept the old system intact, consumers would have been in line for a minimum 11 percent reduction in 2008 auto insurance rates, she said.

The Division of Insurance has established a Web site that collects premium offerings from the state's existing 19 insurers. But anyone relying solely on that Web site to buy a policy will be undereducated, Ms. Cummings said.

"It really is going to be very time consuming to compare these products,'' she said. "We need some more interactive tools and right now it's not that meaningful.'' James T. Harrington, executive director of the Massachusetts Insurance Federation, a trade group that includes Progressive, said Progressive's decision may prompt other insurers to consider entering the Massachusetts market. Some of the major insurers absent from the state include Allstate Corp., State Farm Mutual Automobile Insurance and Geico.