Opponents Win Stay of Mass. Auto Market Changes

February 2, 2005

Opponents of changes to the way the Massachusetts auto insurance system handles high risk drivers have won a court stay of rules that were to begin going into effect this week.

In granting the injunction, Superior Court Judge Raymond J. Brassard ruled that plaintiffs including Commerce Insurance Co. and several agencies “demonstrated a reasonable likelihood of success” that they could win on the merits of their case against the rule changes and that the risks of harm to the plaintiffs from continuing with implementation outweigh the risks to the state.

The decision delays implementation of the transformation of the residual auto insurance market organization, Commonwealth Auto Reinsurers, from a loss sharing to an assigned risk system called the Massachusetts Auto Insurance Plan.

The injunction will remain in effect until a court decides on the merits of the plaintiffs’ case against the MAIP.

Insurance Commissioner Julianne Bowler pressed for and approved the switch to the MAIP. Bowler has asked that the full case be moved to the Supreme Judicial Court for quick resolution. No decision has been made yet.

Commerce Insurance and other plaintiffs have argued that Bowler exceeded her authority in setting up the new MAIP and that the new rules violate certain laws including one called a “take-all-comers” law requiring insurers to accept all risks.

Bowler, armed in part with an opinion from Attorney General Tom Reilly that she was acting within her authority, proceeded with the changes over the protests of Commerce and others.

The agencies joining Commerce Insurance in the fight against the MAIP are urban agencies designated as exclusive representative producers by CAR. They include Orient Heights Insurance Agency in East Boston, AAW Insurance Agency in Allston, J&B Insurance Agency in Mattapan, J.M. Sullivan Insurance Agency in Brockton and Rapo & Jensen Insurance Services Inc. in Boston.

Judge Brassard also approved a motion for CAR lawyers to intervene in support of the new system.

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