Agents Urge Mass. to Scrap Assigned Risk Plan

February 15, 2007

Massachusetts insurance agents today urged the administration of Gov. Deval Patrick to halt the implementation of a proposed auto insurance assigned risk plan begun by his predecessor, Mitt Romney.

Implementation of the Massachusetts Assigned Insurance Plan (MAIP) was ordered in the waning weeks of the Romney administration but was stopped by the Patrick administration pending further review of its effect on the marketplace and an overall review of the auto insurance system in the state.

The influential Massachusetts Association of Insurance Agents, at a public hearing today called to determine whether the state should “modify, amend or disapprove” the new MAIP rules, urged the state to not go forward with the MAIP. Rejecting the MAIP would maintain “the most consumer-friendly automobile residual market in the country,” the agents testified.

Instead, MAIA recommended that the Division of Insurance and Commonwealth Auto Reinsurers, which administers the high risk system, continue to modify the rules of the current system and encourage insurers to appoint exclusive representative producers (ERPs), which handle only high risk accounts, as voluntary agents.

“An assigned risk plan is not the vehicle to attain necessary residual market reform. The fine-tuning of CAR rules, however, should be initiated by CAR and the DOl, as an alternative in order to maintain the balance of the residual market burden and encourage the appointment of ERPs as voluntary agencies. Again, we urge you to disapprove all CAR rules related to an assigned risk plan and not go forward with the MAIP,” the agents’ group testified.

In its testimony, MAIA cited what it said are advantages of the current high risk assignment system including that it allows consumers to choose the agency and company with which they want to do business and it has kept the size of the residual market small at about 5 percent of market.

Source: MAIA
www.massagent.com

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