Fireman's May Leave Mass. Auto Coverage Market
NU Online News Service, July 6, 2:44 p.m. EDT?The Fireman's Fund Insurance Companies has given notice to Massachusetts officials that it plans to leave the state's personal auto market if the system is not reformed.[@@]
Fireman's, based in Novato, Calif., and a subsidiary of the Allianz Group, said because of continuing uncertainty in implementing state personal automobile insurance reform, the company intends to withdraw from the state's auto insurance market on Dec. 31.
However, the company said, if an insurance reform package currently under consideration is enacted by the state, it would rescind its withdrawal action.
"Fireman's Fund would prefer to continue serving the personal auto insurance needs of consumers in Massachusetts," said Cynthia Tidwell, president of Personal Insurance for Fireman's Fund.
Ms. Tidwell continued that, "given the current environment, we have no choice but to issue a notice of our intent to withdraw from personal auto insurance in Massachusetts. Fireman's Fund cannot achieve necessary financial targets within the rules of the existing state personal lines auto program."
Fireman's said it hoped to avoid filing notice of withdrawal from the state's personal automobile market, but reforms approved by the Commonwealth Automobile Reinsurers, the state's residual insurance market device, have not yet been enacted and, even if enacted, may face additional challenges.
Fireman's Fund said it could not wait any longer to make a decision because of regulatory deadlines affecting when notice of withdrawal must be given.
The company said it currently offers auto insurance to approximately 22,000 customers in the state. Its withdrawal would not affect any other lines of business there, it added.
There are currently 19 carriers in the state.
Chris Goetcheus, a spokesman for the Massachusetts Department of Insurance, said the department is optimistic that Fireman's would not withdraw from the market because it said it would not do so if the state reforms the insurance system.
Fireman's has less than one percent of the state's auto market, but its decision underscores what might occur with other insurers should this "Byzantine system" not be reformed, he said.
Earlier this year, Massachusetts Gov. Mitt Romney said he would be making insurance reform an important piece of his administration's agenda.
The state has begun its reform process by putting together a task force to plot how the state must change.
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