MASS. HIGH RISK PLAN VOTED:

A plan to convert the state’s high risk auto reinsurance facility in Massachusetts to an assigned risk plan (ARP) was approved by the industry officials running the current plan at a special meeting on May 20. One quick result could be a rush of insurance companies offering hundreds of agents now without private carrier contracts for auto, involuntary agents known as exclusive representative producers (ERPs), the opportunity to sign new voluntary market contracts with insurers for their private passenger auto business. The governing committee of Commonwealth Auto Reinsurers (CAR) voted without objection to accept reports from CAR’s actuarial and claims committees on how the conversion will work. The committees must still write up actual rules to implement the changes but rules for 2004 and 2005 were expected to be approved at CAR’s meeting on May 27. However, CAR officials said they would ask Bowler for an extension of the deadline for another 30 days to complete the rules necessary for 2006 and 2007. The ARP plan has been pushed by Gov. Mitt Romney and Commissioner Julianne Bowler and supported by a consensus of agents and insurance company leaders in the state. Last month Bowler gave CAR an ultimatum that it should come up with rules to convert to an ARP or she would write the rules herself. Officials have been searching for ways to reform the state’s private passenger auto system to encourage more competition and attract more insurers. Changing the way CAR operates has been a priority. The state’s independent agents praised the actions by CAR. “This is good progress. The CAR governing committee is taking the right steps,” said Frank Mancini, executive vice president, Massachusetts Association of Insurance Agents. Mancini sees the reform as an opportunity for many ERPs to obtain better markets. This month, CAR is to release the loss ratios of ERPs and insurers are expected to seek out those with the better loss ratios for voluntary contracts. Under the previous rules, insurers had no incentives for signing up ERPs with good loss ratios but the new ARP system changes that. Mancini, said he expects “hundreds” of ERPs will be offered the opportunity to sign voluntary contracts with companies. There are more than 700 ERPs across the state.