Mass. Gov. Patrick Derails Romney’s High Risk Pool Changes

By David Weber | January 22, 2007

Massachusetts Gov. Deval Patrick said he will comprehensively review the state auto insurance system after the acting insurance commissioner on Friday suspended rules changes made in the system during the final weeks of the Romney administration.

On Dec. 13, then Insurance Commissioner Julianne Bowler approved a new method for assigning high-risk drivers to automobile insurers that aligned Massachusetts with most other states. The change was opposed by some of Massachusetts’ domestic insurers including the largest one but embraced by a coalition of rivals. The decision capped a four-year-long process that was slowed after Webster-based Commerce Insurance Co. filed a court challenge in January 2005 when Bowler initially approved the plan.

On Friday, Acting Insurance Commissioner Joseph G. Murphy suspended the changes made by Bowler, which were to have taken effect in April.

“I have taken this action in order to consider the impact of the Dec. 13, 2006, order and both the short- and long-term implications of those rules on the Massachusetts private passenger automobile market with the least disruption to consumers and the insurance industry,” Murphy said in a brief statement.

Patrick applauded the move.

“The governor wants the opportunity to take a look not just at this initiative, but at the entire automobile insurance system in Massachusetts,” Patrick spokesman Kyle Sullivan said. “Next week the governor will be putting together a study group to investigate this issue and provide advice to us within the next 60 days.”

State law requires Murphy to act on the rule suspension within 90 days. A public hearing is set for Feb. 15.

Bowler had said the so-called assigned risk plan would more fairly distribute high-risk drivers among insurers, while also reducing losses and fraud to help keep consumer rates low.

Before Bowler’s ruling, Massachusetts assigned agents representing high-risk drivers to insurance companies, and then allowed the companies to assign individual drivers into a pool where losses were shared among carriers in the state’s so-called “residual market.”

The Dec. 13 plan included a so-called “clean in three” provision to remove drivers from the high-risk pool after a three-year period in which an individual maintains continuous insurance coverage and isn’t found to be at fault for an accident or traffic violation.

Critics argued the previous system was susceptible to gamesmanship and fraud as drivers moved in and out of the high-risk pool, with some companies ending up with a disproportionate share and others dumping drivers they didn’t want to insure into the pool.

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