Mass. Moves Ahead On Auto Reform

By Mark E. Ruquet

NU Online News Service, July 2, 12:25 p.m. EDT?Officials in charge of the Commonwealth Automobile Reinsurers (CAR), the Massachusetts residual market for personal auto, have agreed to make operational changes as part of a move to repair the state's fractured insurance market.

Early this week, the CAR governing committee voted 11-2 to make changes in its operations to make it more closely resemble the residual market for personal auto insurance in other states by creating an assigned risk plan, said Chris Goetcheus, a spokesman for the Massachusetts Division of Insurance.

Under the current system, the state's 19 insurance companies do not share in the residual market based on market share. Instead, individuals who cannot obtain insurance on the voluntary market go to an agent who has an appointment with a CAR carrier.

Under the system, some carriers have manipulated the market so they have less share of the CAR market than their competitors, who are burdened with a greater share of high-risk drivers.

"The current system is a CAR wreck," said Frank O'Brien, New England regional manager for the Property Casualty Insurers Association of America, based in Des Plaines, Ill. "What we all hope to do is to change the current system. We feel this transition will result in changes to a residual market that is easier to understand and fairer for those who participate in it."

The governing committee adopted a four-year plan which is intended to make those changes, said Mr. Goetcheus. The CAR governing board's adopted changes are currently under review by the insurance department to ensure they comply with state Insurance commissioner Julianne M. Bowler's mandate for reform.

Public hearings are scheduled for mid-July after the review. There was no indication when the plan would begin to be implemented.

The ultimate hope, said Jim Harrington, executive director of the Massachusetts Insurance Federation, is that the reforms would put the state on the road toward stability and attract more carriers to begin writing in the state again.

"This is an ongoing process and there is still a lot of work to be done," said Mr. O'Brien. "We hope this is the medicine we needed to administer to make the system better and healthier."

Special Reports /

Mass. Moves Ahead On Auto Reform

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