GloucesterTimes.com, Gloucester, MA

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 rate goes into effect April 1.

The bureau, which represents insurance companies, is asking for the reduction because costs - the claims they pay out to policyholders - are going down, said its president, Daniel Johnston.

Fraud-fighting efforts by Lawrence and other communities are 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 that Lawrence and those other cities' drivers receive a greater rate cut than what it proposes for the rest of the state. Johnston said that amount has not been calculated yet.

Since the Lawrence task force was formed in 2003, more than 170 individuals have been charged with insurance fraud.

If the Automobile Insurers Bureau proposal is 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, such as a Toyota Corolla.

But drivers could see even bigger savings because the auto insurers are not 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 (drivers) have 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*:

City/Town%2005 premium%2006 savings

Essex%$780%$28

Gloucester%$854%$31

Manchester%$740%$27

Rockport%$799%$29

Source: Minichiello Insurance Agency

*Based on a popular car, 2004 Toyota Corolla, with a comprehensive insurance policy, owned by a good driver who hasn't had any accidents or moving violations in the last year.