Mass. Proposal Sees New Auto Plan by 2008

April 21, 2004

The campaign to change the way Massachusetts handles high risk private passenger auto policies moved forward last week with the emergence of a draft outline agreed upon by two major players in the effort, the Massachusetts Division of Insurance and the Attorney General’s Office.

The DOI-AG proposal provides a suggested timetable for transforming the current reinsurance facility, Commonwealth Auto Reinsurers (CAR), into an assigned risk plan (ARP) similar to that in many other states.

The draft outline says its “primary objectives” include reducing the number of ERPs (exclusive representative producers) until 2008 when ERPs will be eliminated altogether; affording agents and insurers a reasonable amount of time to adjust to a new assigned risk structure; and providing an orderly transition from a facility structure to an ARP.

The draft suggests that the transition to an ARP might be accomplished by 2008, with implementation occurring in stages. Under the proposed timetable, the last piece of facility business would roll off the CAR books on December 31, 2008.

This latest draft of plans to move to an ARP by its own admission leaves several issues unaddressed, including how the state’s system of credits might operate in the face of territorial rate subsidies.

DOI, the AG and various industry representatives have been working on changing CAR for months. Gov. Mitt Romney has also vowed support for the effort.

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