Mass. Insurers Told of Ways to Manage High Risks

May 25, 2004

Pilgrim Insurance Company, a business process outsourcing firm in Boston, last week sponsored a timely seminar to promote awareness of auto reform and methods for managing high risk business in Massachusetts.

Industry speakers Beth Sprinkel, senior vice president of the Insurance Research Council; Eliot Green, chief, Insurance & Unemployment Division of the Attorney General’s Office, and Laura Kessler, vice president and general counsel of the Insurance Fraud Bureau joined Pilgrim President Ellen Wilcox and other legal and industry experts to create a fact filled day focused on managing the automobile residual market.

Recent communication from Massachusetts Insurance Commissioner Julianne Bowler directed Commonwealth Automobile Reinsurers to change its operations to allow for a more equitable distribution of private passenger automobile residual market insurance risks among insurance carriers. The upcoming changes have auto carriers focused on the best way to handle their respective high loss ratio business.

Pilgrim’s Wilcox shared her firm’s experience with managing high loss ratio business. “We strive for measurable results which are reflected in a review of an agency with a loss ratio close to 400 percent where we reduced their loss ratio by almost 50 percent. We are constantly working with agents to reduce their loss ratios using a team effort of underwriters, claims staff and Special Investigator Unit (SIU) investigators.”

In a session entitled, Taking A Bite Out Of Fraud-What Should Be Done, Beth Sprinkel examined trends in auto injury claims developed by the Insurance Research Council. Sprinkel said Massachusetts loss business is “extremely high” compared to the rest of the country, especially in the area of PIP loss costs. In the last 20 years PIP loss costs were up over 392 percent, she maintained.

Sprinkel also discussed the level of anti-fraud activity by carrier and noted a large percentage of carriers strongly encouraged the enforcement of existing criminal penalties and emphasized the importance of local and state law support.

Speakers provided recommendations on best practices to win the war on fraud. Eliot Green examined the role of the Attorney General’s office and how he and his office would like to work with carriers to not only prosecute but prevent fraud.

Laura Kessler from the IFB reviewed the success of the Lawrence, Mass. initiative, explaining that the success was due to the cooperative effort of the Insurance Fraud Bureau, state and local police, the Offices of the District Attorney and Attorney General as well as the insurance industry. Kessler said officials hope to continue this team approach in Brockton, Boston, Lynn, Springfield/Holyoke and Lowell.

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