Massachusetts Commissioner Looks Forward to Assigned Risk Plan

Last week, the Massachusetts Supreme Court ruled that Commissioner
Bowler’s plan to replace the current Mass Auto scheme of (take all
comers + state-run reinsurance plan) with a more traditional assigned
risk plan is legal.

Insurance Journal passed along some of her thoughts on the
decision:

“We’re one step closer to operating like a normal
market.”[...]

“We’ve taken a giant step. We’re no longer mandating a distribution
force,” she noted, hopeful that insurance companies will like that the
state is doing away with the CAR system that forced them to have
relationships with agents even if they did not use agents.

The ARP operates by assigning drivers to the pool, rather than by
assigning agents to insurers as is done with CAR.[...]

Bowler said the plan contains incentives for insurers to
voluntarily write good risks but these sweeteners might not be
sufficient to keep them from placing all clean drivers in the
ARP. “The Attorney General has been less comfortable relying on market
incentives,” she maintained.

While she sees the ARP as a “huge first step” toward attracting new
insurers to the state’s auto insurance market, Bowler acknowledges
that the ARP alone will not produce a dramatically different
marketplace for insurers or insureds.[...]

Also, she believes additional reform is needed before new insurers are
likely to come knocking. That’s because the state still controls the
pricing.

Hey, baby steps are better than no steps at all.