Mass. Insurance Agents Vow to Protect Right to Auto Policy Ownership

By | May 20, 2008

Massachusetts independent insurance agents are unhappy about a state ruling that they believe erodes their ownership of their customers’ auto policies and denies them proper payment on certain high risk policies.

The agents plan to ask the state Legislature to overturn the ruling.

The object of the producers’ complaints is Rule30C of the Massachusetts Auto Insurance Plan (MAIP), which is where carriers place high risks they don’t want to insure voluntarily. The rule requires a carrier that decides to write a MAIP risk voluntarily to pay the producer of record for that risk a commission. The rule applies even if the agent does not have a voluntary contract with the carrier.

Under Rule30C, the carrier’s obligation to pay the producer of record a commission ends March 31, 2011. Producers, led by the Massachusetts Association of Insurance Agents (MAIA), argue that the commission should be paid to the producer of record until the policyholder leaves the producer’s agency.

However, Insurance Commissioner Nonnie Burnes recently declined to change the rule to extend the commission obligation in perpetuity as the agents want.

“That’s a big issue,” said Frank Mancini, MAIA president and chief executive officer.

Mancini said his group believes current state law already addresses the agents’ right to expirations but that clarifying legislation is needed in light of Burnes’ ruling.

He said MAIA would file legislation in the next session of the Legislature designed to protect the ownership of an agent’s expirations for all MAIP assigned risks written voluntarily by the assigned company.

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