PETITION OF:

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In the Year Two Thousand and Seven.

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An Act clarifying the authority of the commissioner of insurance under the auto insurance competitive rating law.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Chapter 175E of the General Laws, as appearing in the 2004 Official Edition, is hereby amended by striking out section 5 and inserting in place thereof the following:- Section 5. (a) If the commissioner determines, after a hearing, at which representatives of consumers and other interested parties may participate, and on the basis of findings of fact and conclusions, that, with respect to any territory or to any kind, subdivision or class of insurance, competition has been either (i) insufficient to assure that rates will not be excessive, or (ii) so conducted as to be destructive of competition or detrimental to the solvency of insurers, he shall, within ninety days or as soon thereafter as possible and without regard to calendar dates specified in section one hundred and thirteen B of chapter one hundred and seventy-five, fix and establish the rates for such insurance or territory pursuant to the provisions of section one hundred and thirteen B of chapter one hundred and seventy-five. Such procedure shall have a specified duration of not more than one year but may be renewed by the commissioner upon appropriate findings of fact, conclusions and order. Notwithstanding the one-year limitation on the duration of the fix and establish procedure, the commissioner may provide for a transition to competitive rating over a period of more than one year and in so doing may allow the forms of limited competition specified in subsection (c)(iii). During such transition, the commissioner shall each year determine whether to allow a resumption of full competitive rating or to continue to fix and establish rates in part.

(b) In determining whether to renew the procedure for fixing and establishing rates, the commissioner shall consider, the following factors, among others: (i) whether there are a sufficient number of companies writing private passenger auto insurance in the market; (ii) whether such companies have sufficient capital and capacity for the risks presented; (iii) whether consumers have sufficient choices of prices, products and services; (iv) whether consumers have access to the same types of discounts and innovative products and services as are available under competitive rating systems in other states; and (iv) the extent to which the fix and establish procedure affects the number of companies writing private passenger auto insurance in the Commonwealth and the choices available to consumers.

(c) Upon making the required findings, the commissioner may: (i) allow for a return to full competitive rating under this chapter; (ii) renew the procedure for fixing and establishing rates; or (iii) allow limited competition by territory, by coverage, by service or by such other category as the commissioner shall determine, and such limited competition may include, but not be limited to, authorization for companies to decrease or increase rates within prescribed bands from year to year and/or to file and competitively rate coverage enhancements, endorsements or modifications and services.

(d) Within thirty days after the close of the hearing the commissioner shall make this determination in a report which shall be made public.