Commerce Insurance Goes to Court Over Newly-Approved Mass. Auto Assigned Risk Plan

January 5, 2005

The Commerce Insurance Company, a wholly owned subsidiary of The Commerce Group, Inc., has filed an action in Massachusetts Superior Court, Suffolk County, in response to the rules published by the Division of Insurance for a new automobile residual market system.

Commerce is asking the court to determine whether the new rules are consistent with existing Massachusetts laws.

Commerce has testified at each of the three public hearings on the new assigned risk plan known as the Massachusetts Assigned Insurance Plan and submitted suggested amendments. Over the course of months of hearings, Insurance Commissioner Julianne Bowler adopted numerous revisions to the original rules of the MAIP before giving her final approval on Dec. 31. While those revisions addressed some of Commerce’s concerns, the company is asking the court to resolve a number of legal issues that arise from specific aspects of the new system.

The specific actions cited in Commerce’s court filing were not available at press time. However, Commerce officials have repeatedly raised concerns that the rules of MAIP may violate several laws, including the state’s “take-all-comers” law and another law prohibiting insurers from notifying policyholders of their placement in the residual market. The insurer has also protested a new ban against placing certain members of groups given discounts in the residual market.

The Commerce Insurance Company, which is rated A+ (Superior) by A.M. Best, is the state’s largest writer of auto insurance. It is the principal operating subsidiary of The Commerce Group, Inc. headquartered in Webster, Mass. Additional property and casualty insurance subsidiaries include Citation Insurance Company in Massachusetts, Commerce West Insurance Company in California and American Commerce Insurance Company in Ohio.
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