Mass. Commissioner Appeals Court Ruling That Blocked Auto Changes

August 24, 2005

The Romney Administration has decided to appeal a June court ruling that found that the state’s insurance commissioner exceeded her authority when she tried to change the state’s auto insurance residual market.

A spokesperson for Massachusetts Insurance Commissioner Julianne Bowler said she is appealing the court ruling that undermined her efforts to convert the state’s current reinsurance facility, known as Commonwealth Auto Reinsurers, into an assigned risk plan similar to those in other states.

“We’ve always believed she had the authority to act as she did to implement the assigned risk plan,” Chris Goetcheus said.

At the same time, he said, the administration is pushing for legislation that would clarify the regulatory authority to make such changes. A provision to explicitly grant the authority to transform the residual market is contained in a broad auto insurance reform proposed by Gov. Mitt Romney.

In June, a Superior Court judge ruled that Bowler exceeded her authority last December when she ordered the creation of an assigned risk plan known as the Massachusetts Assigned Insurance Plan to replace CAR.

Commerce Insurance, Arbella Mutual, the Center for Insurance Research and a handful of insurance agents brought the suit that scuttled the Bowler plan.

The court found that the legislature never intended to give the commissioner authority to establish an assigned risk plan and, in fact, it intentionally moved away from such a structure when it created CAR in 1973. Bowler, backed by Attorney General Tom Reilly and proponents of the new plan, had argued that a 1983 law amending the original 1973 CAR legislation permitted her action. But Judge Ralph Gants dismissed that notion.

“She is wrong. As is plain from the history of this statute….there is nothing in the 1983 legislation that suggests any legislative intent to permit the Commissioner to re-establish an Assigned Risk Plan that the Legislature had specifically disestablished ten years earlier,” Gants wrote.

The court did not rule on the specifics or wisdom of Bowler’s assigned risk plan but only on her authority to impose it without legislative approval.

The state attorney general’s office has filed the appeal on behalf of Bowler.

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