Commonwealth Automobile Reinsurers, (“CAR”) is the statutory body established by Massachusetts General Laws c. 175, § 113H, that administers the residual markets for personal and commercial motor vehicle insurance, including Taxi and Limousines. CAR also acts under agreement with the Division of Insurance as the state’s statistical agent for motor vehicle insurance.
The highlights of CAR’s Report for the period October 1, 2013 – September 30, 2014
Each year after an annual meeting CAR publishes a report summing up its operations for the prior fiscal year. The latest report which relates to the period from October 1, 2013 to September 30, 2014, can be accessed from the link following this article. Agency Checklists also has abstracted the main points of interest below.
Massachusetts Automobile Insurance Plan highlights
The Massachusetts Automobile Insurance Plan (MAIP), which provides access to private passenger Motor Vehicle Insurance to Eligible Risks who are unable to obtain such insurance through the voluntary market, and ensures that the risks written through the MAIP are distributed equitably based on the quota share of each Member. The 2014 Annual Report noted that:
- No Rate increase requested: Based on a review by CAR’s actuarial consultant that found no support for a CAR rate change, CAR made no filing for any MAIP rate change.
- Assigned Risks continued decline: The MAIP’s percentage has declined to 1.7% of the Massachusetts private passenger automobile insurance market. This number compares to the Residual markets 4.3% percentage just prior to the start of the MAIP in 2008.
- New Notice of Assignment expiration: CAR also implemented a new Notice of Expiration of Policy Assignment to replace the issuance of a standard non-renewal notice. This clarified that the nonrenewal resulted from the operation of the CAR rule on a three-year assignment period and not any underwriting reason.
Commercial Auto and Taxi/Limousine Program highlights
CAR manages the commercial automobile pooling mechanism of the residual market through the Commercial Automobile and Taxi/Limousine Programs. Servicing Carriers are selected to service the ceded policies of both programs, which are reviewed annually to ensure that the equitable distribution of residual market business is maintained. Members share in the pooled results based on voluntary commercial written premium.
- Residual Commercial Market grew a little. As of August, 2014, the commercial residual market comprises approximately 18.3% of the total commercial written premium, a slight increase over the 17.0% share for the prior year.
- Rewritten Commercial Manual. The Division of Insurance approved with CAR’s commercial residual market rate filing included an extensive rewrite of CAR’s Rating Manual. CAR’s new Commercial Automobile Insurance Manual Rules and Rates became effective September 1, 2014.
- Revised Experience Rating Plan. Also, CAR added a revision to its Experience Rating Plan that introduced an adjustment factor designed to bring the plan in balance.
CAR operational and budget items
CAR conducted a lengthy a review of its operations in 2014 that resulted in:
- Staff reduction for cost saving: A realignment of reporting that resulted in the elimination of positions which generated an approximately 7% reduction in future employee costs.
- Budget projection down 5.7%: CAR found additional cost reductions in insurance and building maintenance, when combined with the aforementioned savings in employee costs, resulted in an overall 5.7% reduction in CAR’s operating budget for fiscal year 2015 when compared to fiscal year 2014.
CAR also continued its role as the statistical agent in collecting, editing, analyzing, and disseminating as required Massachusetts statistical data for the Division of Insurance. In the course of this to verify the accuracy and completeness of its database, CAR reconciles reported statistical data to company financial statements and performs an analysis that compares each company’s distribution of data to the industry’s distribution.