The Property Casualty Insurers Association of America (PCI) has urged the Commonwealth Automobile Reinsurers (CAR) Governing Committee, the board that oversees the high-risk auto insurance pool in Massachusetts, to immediately adopt changes in the way it operates.
In a letter to the Commonwealth Automobile Reinsurers (CAR) committee, PCI Vice President and New England Regional Manager Frank O’Brien suggested the board act at its meeting today (May 6) to make changes effective July 1.
“PCI wholeheartedly supports Insurance Commissioner Julianne Bowler’s plan for revamping CAR’s rules,” said O’Brien. “As outlined in her April 29th letter to CAR, the governing committee needs to come up with a new loss sharing formula by July 1 so that high loss ratio business can be reallocated among the state’s largest servicing insurance companies by Jan. 1 of 2005.
“CAR’s current method of assigning producers to certain companies and the distribution of high-risk business is unfair,” said O’Brien. “It has driven companies out of Massachusetts and been a financial burden on the companies that remain. The current rules threaten the stability of the entire market and must be corrected at once. The departure of another sizable company from the state could trigger an availability crisis because the few remaining companies would face additional strains on their financial capacity and their ability to service additional policies. There are only 19 companies remaining in Massachusetts that write auto insurance.
“The time for fixing the broken Massachusetts residual market is now, and we strongly encourage each member of the Governing Committee to put aside any business relationships or narrow self interests or political considerations to vote in favor of Commissioner Bowler’s plan in the interests and health of the overall market.”
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