Massachusetts Decision Leaves Open The Possibility Of An Assigned Risk Plan

Boston, MA – The decision by Massachusetts Insurance Commissioner Nonnie S. Burnes to refer portions of the assigned risk plan regulations to the Commonwealth Automobile Reinsurers (CAR) for further improvement leaves open the possibility that she will approve an assigned risk plan, according to the American Insurance Assocation (AIA).

"The Commissioner's decision to direct CAR to improve the ‘clean in three' portion of the assigned risk regulations leaves open the possibility that she will ultimately decide to replace the current inequitable residual market system in Massachusetts with an assigned risk plan," said John Murphy, AIA vice president, Northeast Region.

The decision states, "we find that were an assigned risk plan to be implemented in our residual market at some point in time, additional amendments would be required to the ‘clean in three' provision."

"Clean in three" applies to drivers who have not been at fault in an accident generating an insurance claim or had a moving violation in 36 months.

"The assigned risk plan has been studied for years, with improvements in ‘clean in three' it should be implemented," said Murphy, "The current system is unfair and benefits some insurers over others."

Murphy pointed out that the 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 transition to a traditional assigned risk plan, which is the system used in most states, will be helpful to the broader auto insurance market. It will send an important positive signal thatMassachusettsis serious about normalizing its auto insurance system," added Murphy. "This first step should then be followed by introducing elements of competition on price and products as recommended by Governor Patrick's Auto Insurance Study Group."

SOURCE: Massachusetts Decision