Mass. Gov. Patrick replaces commissioner; halts high risk plan

Massachusetts Gov. Deval Patrick has taken steps to install his own appointee as insurance commissioner and halted the ongoing implementation of reforms to the state’s auto insurance high risk pool championed by the regulator he is replacing.

Patrick said he would review the state auto insurance system after he had his acting insurance commissioner suspend rule changes made in the system during the final weeks of the Romney administration.

On Dec. 13, then Insurance Commissioner Julianne Bowler approved a new method for assigning high-risk drivers to automobile insurers that aligned Massachusetts with most other states. The change has been opposed by Massachusetts’ largest auto insurer — Commerce Insurance — but embraced by a coalition of rivals. The decision capped a four-year-long process that was slowed after Commerce filed a court challenge in January 2005 when Bowler initially approved the plan.

On Jan. 19, Acting Insurance Commissioner Joseph G. Murphy suspended the changes made by Bowler, which were to have taken effect in April.

“I have taken this action in order to consider the impact of the Dec. 13, 2006, order and both the short- and long-term implications of those rules on the Massachusetts private passenger automobile market with the least disruption to consumers and the insurance industry,” Murphy said in a brief statement.

The Patrick administration explained that the move was to buy time for further study.

“The governor wants the opportunity to take a look not just at this initiative, but at the entire automobile insurance system in Massachusetts,” Patrick spokesman Kyle Sullivan said. He said patrick would name a study group to provide advice within the next 60 days.’

State law requires Murphy to act on the rule suspension within 90 days. A public hearing is set for Feb. 15.

Bowler sought to create an assigned risk plan similar to those in more than 40 other states. This Massachusetts Assigned Insurance Plan, known as MAIP, would replace the current system under which the state assigns agents with high risk insureds to insurers that then share all the losses.

The MAIP included a so-called “clean in three” provision to remove drivers from the high-risk pool after a three-year period in which an individual maintains continuous insurance coverage and isn’t found to be at fault for an accident or traffic violation.

Commonwealth Auto Reinsurers (CAR), which administers the state’s high risk operation, had been working feverishly to meet the April deadline. Some issues remained unresolved at the time the MAIP implementation was suspended, one of them involving agents. Independent agents have been pushing for a change that would formally recognize their ownership of any business that insurers voluntarily remove from the assigned risk plan. The Massachusetts Association of Insurance Agents has asked CAR for an amendment that would require that a company taking a risk out of the MAIP to write it voluntarily would be required to recognize the producer of record and pay the producer a commission.