Massachusetts Insurance Commissioner Julianne Bowler has issued clarifications and minor revisions to her November decision creating a new auto insurance residual market, assigned risk plan to be known as the Massachusetts Automobile Insurance Plan (MAIP).
The new plan went into effect Jan. 1, 2005 and is to result in full implementation by Jan. 1, 2008.
“In keeping with Governor Romney’s goal of restructuring this troubled market, I have acted with my regulatory authority and presided over an open and constructive six month process to achieve necessary consumer protections and fairness to all insurers who will offer coverage in Massachusetts going forward,” Bowler said.
The MAIP will place high risk drivers with insurers in proportion to insurers’ voluntary market share, ending the assignment of involuntary agents’ policyholders to insurers through a complicated subscription formula that critics claimed was inequitable and contributed to insurers’ reluctance to write in the state.
Among the revisions is one allowing insureds being placed in the residual market to submit a statement that they have been declined coverage in the voluntary market, rather than requiring the insurer to issue a letter of declination. Bowler, however, retained the requirement that consumers be informed why they are declined in the voluntary market.
Several insurers had protested the MAIP rule that prohibits placement of risks receiving group discounts in the residual market. Bowler, however, upheld this rule, which critics say could reduce or end companies’ willingness to offer group discounts.
She also declined to implement penalties for insurers withdrawing from the private passenger market.
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