BOSTON (AP) -- Car owners could gradually see more competition in the auto insurance market under a plan unveiled Monday by the state insurance commissioner.

The transition to "managed competition" will continue to give the state strong regulatory control to protect consumers from excessive rates, but will also introduce more competition and create more choice and lower premiums, Insurance Commissioner Nonnie S. Burnes said.

Massachusetts in the only state where state regulators, not the market, set car insurance rates.

Consumers should be able to take advantage of the new competitive rates for policies renewing on or after April 1, 2008, Burnes said.

"Taking gradual steps to introduce competition to the auto insurance market will have a positive impact on consumers across Massachusetts," Burnes said.

In March, a panel appointed by Gov. Deval Patrick to study ways of reforming Massachusetts' auto insurance system recommended curbing state regulation and moving toward competitive, market-based rates.

The panel found that competitive rating is "essential to attract and retain insurers to write this line of business in the Commonwealth."

Nineteen insurers currently write auto insurance policies in Massachusetts. Since 1990, 35 companies, including national carriers, have left the market.

The state's insurance rates have been going down in recent years because of decreasing claims, and a crackdown on auto insurance fraud.

Under the new regulations, which don't need legislative approval, insurance companies will still need to get the approval of Burnes' office, submitting their proposed insurance products and rates before offering them to the public.

"It's not like the grocery store where they can have any price they want," she said.

Burnes said she decided to take the step to partially deregulate the industry now because the industry is relatively healthy at the moment and rates are trending down anyway.

She also said she will view with "extreme skepticism" insurers who propose to base rates on socio-economic factors, including education, occupation, home ownership or credit scores.

Burnes said she'll retain her power to disapprove rates before they become effective, prevent rates that are unfairly discriminatory and step in after rates take effect if they appear excessive in any given territory.

The plan has its skeptics.

Deirdre Cummings, program director for the consumer advocacy group MassPIRG, said she's reserving judgment until she's had more time to study the issue.

Cummings it would be better to ban outright rates based on socio-economic factors like education, occupation and home ownership. She also hoped the new regulations are the subject of a public hearing before they are made final.

Others applauded the plan.

Joseph Meador, a professor in the college of business at Northeastern University and a member of Patrick's auto insurance task force, said Burnes' proposal bring some reality to the auto insurance rate-setting process.

"Hopefully (insurers) will be able to develop more accurate rates and be able to reflect groups of drivers' actual cost in setting rates, rather than some arbitrary statewide average," he said.

Fred Eppinger, chief executive officer of The Hanover Insurance Group, called the decision "thoughtful and measured" and said it will "enable quality agents to provide their customers with more choices -- more products and services."

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By Steve Leblanc, Associated Press Writer

Copyright © 2007 The Associated Press. All rights reserved.