Patrick Administration Holds Hearing Today on Mass. Assigned Risk Plan

February 15, 2007

There is another public hearing today in Boston on a proposed assigned risk plan for the Massachusetts auto insurance system, a plan that has been in the works and the subject of multiple hearings since 2003.

Last month, the Gov. Deval Patrick halted implementation of the ARP that was set in motion by former Commissioner Julianne Bowler in the waning days of the previous Romney administration. Patrick has promised his administration will review the ARP plan in conjunction with taking a comprehensive look at the entire auto insurance system.

“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,” Acting Insurance Commissioner Joseph G. Murphy explained last month when he suspended the changes made by Bowler.

On Dec. 13, Bowler approved the new method for assigning high-risk drivers to automobile insurers effective in April, noting that it would align Massachusetts with most other states. Bowler believed that the new plan would more fairly distribute high-risk drivers among insurers, while also reducing losses and fraud.

Under its current system, Massachusetts assigns agents representing high-risk drivers to insurance companies, and then allows the companies to assign individual drivers into a pool where losses are shared among carriers.

But several influential domestic insurers prefer the current assignment system and have steadfastly opposed the ARP, arguing that the switch is unnecessary and poses risks for consumers. The opponents include Webster-based Commerce Insurance, the state’s largest auto insurer, which lost a court challenge last summer to block Bowler’s plan.

Agents have been generally supportive of the ARP, although they have pressed for specific modifications in Bowler’s plan as it has evolved. At today’s hearing, the agents urged the state to scrap the assigtned risk plan and keep the current system (See breaking story at

The opponents and agents, along with a coalition of insurers that support the Bowler plan as a step towards a more competitive market, are expected to speak up at today’s hearing.

Among the groups testifying in favor of the new ARP today will be the American Insurance Association.

John Murphy, AIA vice president, Northeast Region, will testify that the current system is “unfair and benefits some insurers over others.”

Murphy’s testimony points out that the state attorney general concluded years ago that the current system does not meet the statutory mandate for a fair and equitable sharing of residual market losses.

“The rapid transition to a traditional assigned risk plan will be helpful to the broader auto insurance market. It will address current inequities in the system, which are a critical problem. It also will send an important positive signal that Massachusetts is serious about normalizing its auto insurance system,” Murphy will add.

Gov. Patrick has also named a study group to look into the entire system and make recommendations, which are expected next month.

Topics Carriers Auto Massachusetts

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