Racing against an end-of-the-month deadline to come up with rules to transform itself into an assigned risk pool, the Massachusetts reinsurance facility for private passenger auto insurance has rescheduled its second meeting to May 20.
The agency, known as CAR, short for Commonwealth Auto Reinsurers, held its first meeting on May 6 to begin drafting new rules and will now meet for a second time next Thursday, having postponed a meeting originally scheduled for yesterday, May 13.
Massachusetts Insurance Commissioner Julianne Bowler has given CAR 30 days to adopt rules to convert CAR to an assigned risk type plan. If CAR is unable or unwilling to change its rules, she said she would exercise her own authority to implement the changes she wants.
The commissioner directed that the transition be accomplished over three or four years to minimize disruption in the marketplace.
In Massachusetts, private passenger high risks are now assigned in blocks of business to carriers, rather than assigned individually as in assigned risk plans operating in many other states. The Massachusetts method ends up penalizing some carriers over others since some carriers get blocks of business with high loss rations while other get blocks with low loss ratios, critics and a recent Tillinghast study maintain.
“This unfair distribution of losses has created an inequitable distribution of residual market risk that has been a significant factor to existing carriers exiting and new carriers declining to enter the market,” Bowler told CAR officials in her letter.
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