Mass. Agents Face Battle Over Commission Bid

The Mass. Attorney General has recommended that agents’ auto insurance commissions be frozen at $114 per vehicle until further proof of agencies’ actual expenses is made available. The AG is pressing for additional documentation to back-up agents’ request for higher commissions.

The State Rating Bureau (SRB), which recommended that 2005 rates increase by one percent, said the average commission should increase to $119.1, or about five percent.

The AG and SRB proposals are at odds with the commission change requested by the Massachusetts Association of Insurance Agents (MAIA) on behalf of the state’s agents. MAIA is seeking a 32 percent jump in average commission from $114 to $151. Its filing is based on a new 2004 Agency Cost Study it paid the firm Tillinghast to conduct.

According to MAIA, the AG now wants to compel MAIA to produce back-up agency tax returns and other substantiating documents to verify the agency expense data included in the agency study. The AG also requested that MAIA be compelled to provide the names of the agencies participating in the study if it does not produce the requested documents, MAIA reported last week.

During the cross examination, MAIA’s witness testified that neither she nor MAIA were in possession of the tax documentation being sought. Further, MAIA refused to supply the AG with the names of the agencies participating in the cost study.

MAIA said it would respond to the AG’s motion this week.

The AG has also recommended that overall private passenger auto rates be reduced by 6.2 percent for 2005.