For Immediate Release - August 27, 2004

Insurance Commissioner Bowler Rules On Proposed Residual Auto Insurance Market Changes

Orders C.A.R. to Adopt Further Consumer and Market Protections

Massachusetts Insurance Commissioner Julie Bowler today issued an order concerning proposed new rules for the distribution of high-risk drivers among insurers in the state's private passenger auto insurance residual market.

Following a July 22 nd public hearing and thorough review by Commissioner Bowler and technical staff, she is remanding Commonwealth Automobile Reinsurers' ("C.A.R.") proposed rule changes to its Governing Committee so that they may consider and implement further consumer and market protections the Commissioner has specified in her order.

"C.A.R. is to be commended for presenting a solid framework for residual market reform and transition. Any systemic changes that are ultimately implemented must address concerns raised during our hearing process. In keeping with our collaborative process and with an end goal of creating a stable, predictable and more transparent residual market, I am directing C.A.R. to address these areas," said Commissioner Bowler.

Among the recommendations made by Commissioner Bowler:

  • Clarify the rules so that drivers with good driving records are not impacted by the changes in the residual market.
  • Adopt the so-called "Clean in Three" proposal, under which experienced drivers with no at-fault accidents or moving violations in the most recent three years cannot be placed in the assigned risk plan.
  • Introduce incentives that will encourage insurers to create new agencies in urban areas.
  • Create incentives for insurers to more effectively combat fraud, including raising insurer claims investigation standards;
  • Amend proposed rules to avoid consumer disruption during the three-year transition to an assigned risk plan.

Commissioner Bowler's order requires C.A.R.'s Governing Committee to submit recommended amendments by September 24 th. A public hearing will be scheduled for October 4 th at the Division of Insurance to allow for further consideration of the proposed rule changes.