TO: Commonwealth Automobile Reinsurers, Insurance Companies and Insurance Company Groups That Sell Private Passenger Motor Vehicle Insurance Policies in Massachusetts
FROM: Nonnie S. Burnes, Commissioner of Insurance
DATE: September 4, 2009
RE: Regulatory Review Standards Applicable to Private Passenger Motor Vehicle Insurance Rate Filings in the Residual Market for Rates Effective on or after April 1, 2010

In furtherance of my commitment to manage competition in our private passenger motor vehicle insurance market, I am continuing certain transitional constraints with regard to the rate filing for the residual market that the Commonwealth Automobile Reinsurers ("CAR") shall make for private passenger motor vehicle insurance policies with effective dates on or after April 1, 2010. I remain steadfast in my resolve to maintain a small residual market, to keep the number of uninsured drivers to a minimum and to ensure that the rates in the residual market are neither excessive nor unfairly discriminatory. The goal of this Bulletin is to meet all of these objectives.

I will find a CAR private passenger motor vehicle insurance rate filing to be unfair, unreasonable, and in violation of public policy if it results in an increase of more than 2% to the current base rates for bodily injury liability, personal injury protection, or property damage liability for insureds who meet the following conditions:

  1. The insured has been continuously insured without a lapse in coverage during the 12 months preceding the effective date of the policy; and
  2. At the time the coverage selections page is issued, the insured has accrued no more than 4 merit rating points under the CAR private passenger automobile insurance rate manual, and a claim payment has not been made under any or all of the above coverages to or on behalf of the insured in connection with more than one accident during the three years preceding the effective date of the policy.

Insureds who satisfy the first condition shall receive a 10% discount from the bodily injury liability, personal injury protection, or property damage liability. Insureds who satisfy the second condition also shall receive a 10% discount on these coverages. For insureds who qualify for both discounts , the discounts shall be applied multiplicatively to the bodily injury liability, personal injury protection, or property damage liability base rate in effect on April 1, 2010 so that the base rate underlying the final premium is not more than 2% higher than the current base rate.

I also will find a CAR private passenger motor vehicle insurance rate filing to be unfair, unreasonable, and in violation of public policy if it requests an increase of more than 15% to the current average base rates for collision and comprehensive. Additional constraints are listed in Exhibit 1. The CAR base rates applicable to policies with effective dates of April 1, 2009 through March 31, 2010 are shown in Exhibit 2.


Exhibit 1

Requirements for CAR Private Passenger Motor Vehicle Rate Filing

For Policies with Effective Dates on or after April 1, 2010



Rating Territory Relativities

The base rate change shall be uniform across all rating territories and operator classifications for the following coverages:

  • 20/40 Bodily Injury Liability including coverage for injuries to guest occupants and accidents occurring out of state.
  • $5,000 Property Damage Liability
  • Personal Injury Protection (Full Coverage)

Changes to the collision and comprehensive coverage base rates may vary across rating territories and operator classes in accordance with the statistical experience of policies issued through the MAIP or previously ceded to CAR. The base rate change to any operator and rating territory combination shall not be more than 25% for each coverage.

Rate Changes Affecting Base Rates for 20/40 Uninsured Motorists Coverage

  • The increase in the average annual premium for 20/40 limits of uninsured motorist coverage shall not exceed $10.

Other Constraints

  • The rating territory definitions in the 2009 CAR private passenger motor vehicle insurance rate manual shall remain in effect for policies rated in accordance with this manual with effective dates of April 1, 2010 through March 31, 2011.

  • The operator classifications in the 2009 CAR private passenger motor vehicle insurance rate manual shall remain in effect for policies rated in accordance with this manual with effective dates of April 1, 2010 through March 31, 2011.

  • The number of merit rating points applicable to at-fault motor vehicle accidents and traffic law violations, and the percentage adjustment for each point or incident free year in the 2009 CAR private passenger motor vehicle insurance rate manual shall remain in effect for policies rated in accordance with this manual with effective dates of April 1, 2010 through March 31, 2011.

  • The annual mileage discount in the 2009 MAIP private passenger motor vehicle insurance rate manual shall remain in effect for policies rated in accordance with this manual with effective dates of April 1, 2010 through March 31, 2011.

Exhibit 2


Exhibit 2


Exhibit 2


Exhibit 2


Exhibit 2


Exhibit 2