Mass. to move ahead with assigned risk plan

Massachusetts Insurance Commissioner Julianne Bowler has set Nov. 10 for a public hearing into her guidelines for moving the state’s auto insurance system for high risks from a reinsurance plan to an assigned risk plan. If her guidelines remain as she has proposed, the new assigned risk plan will begin accepting risks starting April 1 of next year.

The hearing will address changes in the rules for the assigned risk plan – known as the Massachusetts Assigned Insurance Plan, or MAIP – and the timetable for transitioning from the existing reinsurance system to the MAIP.

In August, the Supreme Judicial Court unanimously upheld the commissioner’s authority to implement an assigned risk plan over a challenge by several insurers. Bowler’s MAIP guideline, which was first proposed in December 2004, is not expected to be dramatically altered but Bowler has indicated a desire to amend the transition plan to reflect marketplace changes that have occurred while the ARP was held up by legal challenges.

In her revised plan, new business could be written in the MAIP as of April 1, 2007 and renewal business as of July 1, 2007. This would apply to all agents, including ERPs and agents with voluntary markets.

Bowler’s revised plan also addresses a controversial provision – the so-called clean-in-three rule – affecting drivers with good records who insurers may not want to voluntarily insure for other reasons. Bowler has removed the ban on clean-in-three risks being written in the MAIP, but to guard against them being trapped without a company, she wants to require the MAIP to shop them to all carriers after their third clean year. If no carrier voluntarily writes them, then CAR is required to notify the drivers and give them the option of staying with their current assigned risk company or being reassigned.