MASS. EYES COMMERCIAL AUTO:

While most attention has been focused on reforming this state’s private passenger auto insurance residual market, progress is slowly being made in another area agents say is critical: the commercial auto residual market. By Jan. 1, 2005, agents and some companies hope to re-engineer the way the residual market, Commonwealth Auto Reinsurers (CAR), handles high risk commercial auto accounts. Voluntary agents have been complaining for close to two years that the present system gives unfair access to agents who do not have voluntary contracts and write only through CAR, known as exclusive representative producers. In some cases, voluntary agents have no choice but to send accounts to nearby ERPs to secure coverage. As with CAR’s private passenger scheme, its commercial lines operation is also complex. Insurers are financially penalized in some cases for reinsuring commercial auto business through CAR, except for certain so-called excluded classes of buses, trucks and other high risk vehicles. At first there were proposals to simply expand the list of excluded classes so insurers would not be discouraged from accepting these risks. But a survey of their members convinced Mass. Association of Insurance Agents (MAIA) leaders that the problems ran deeper. Insurers weren’t writing these risks voluntarily or in CAR, agents revealed. So MAIA threw its support behind a move to equalize access to the plan for all agents, remove company penalties for ceding business, and limit the number of servicing carriers. Last month the long-sought plan almost got sidetracked over a CAR notification issue but the governing committee agreed to permit CAR staff to work on the plan’s details while the procedural issue was resolved. The plan will now be addressed again at the April CAR meeting.