MASS. ADOPTS COMMERCIAL REFORMS:

Massachusetts Insurance Commissioner Julianne Bowler has approved plans to implement a limited servicing carrier program for the state’s commercial auto residual market as proposed by Commonwealth Auto Reinsurers (CAR) and backed by most within the insurance industry. The program is an attempt to streamline the way CAR handles high risk commercial auto risks by reducing the number of servicing carriers involved in handling them and equalizing access to the residual market for all agents. The new limited servicing carrier program will be in effect for ceded commercial policies effective Jan. 1, 2006. Agents have been complaining for several years that the present system gives unfair access to markets to agents who do not have voluntary contracts and write only through CAR, known as exclusive representative producers. The plan is to reduce the number of insurers handling high risk commercial lines accounts to a handful of companies on the one hand, while providing equal access to these carriers for voluntary and ERP agents on the other. Opponents of the plan, including Arbella and Commerce, warned that it would lead to major market disruption, with as much as 50 percent of the commercial residual market business having to change carriers as a result. Meanwhile, deliberations on changes to the state’s private passenger auto residual market plan are continuing.