News Currents
Mass. agents seek 4% auto pay raise
Massachusetts independent insurance agents have filed for a four percent hike in the commission they receive on private passenger auto insurance polices.
If approved by Insurance Commissioner Julianne Bowler, the increase would mean a typical commission per policy of $126.19 beginning April 1, 2007, up from the current figure of $121.34.
Whatever new commission is approved for 2007, it will not go into effect on the traditional date of Jan. 1. Under a new law, rates and commissions for 2007 will go into effect beginning April 1 next year. This later effective date is intended to lessen the need for insurers to issue provisional invoices. Insurers have sent estimated invoices in past years because the decision on overall rates is not announced until Dec. 15, which in turn delays approvals for group and safe driver discounts until mid-February.
“This should reduce the workload for agents and companies and reduce the confusion for policyholders,” said Frank Mancini, president and chief executive officer, Massachusetts Association of Insurance Agents, on the April 1 date.
MAIA’s commission filing for 2007 uses the same 2005 cost study information utilized for 2006 but trends it forward to reflect anticipated increases in agency costs.
With this filing MAIA is also trying to establish whether its studies of its membership are fairly representative of the state’s population of independent agencies. Bowler raised the representation question last year, citing a list from the state’s statistical agent for auto insurance, Commonwealth Auto Reinsurers, which showed that some 28 percent of private passenger independent agencies did not belong to MAIA.
MAIA’s own analysis claims there are 1,751 total independent insurance agencies writing private passenger auto insurance in the state, of which 1,521 — or 86.9 percent — are MAIA members.
More to the point, claims MAIA, its members write 94.1 percent of the exposures written by independent agents, a percentage that its actuaries say should make its membership representative of the whole.
“We believe that as long as MAIA members write more than 90 percent of the policies written by Massachusetts agencies, it is reasonable to perform cost studies of MAIA members alone,” its filing states.