Reprinted with Permission from Best’s Review magazine.
MADRID – The top private-passenger automobile writer in Massachusetts is looking online, among other things, to meet the challenges of the nearly five-year-old competitive marketplace, according to the top executive of parent Mapfre USA.
For 30 years, the state set auto rates in Massachusetts, creating a market in crisis, with writers fleeing the state until about 19 remained. In 2008, a new managed competition system was put in place, allowing insurers much greater control over products and pricing, although the market remains heavily regulated.
After reforms, Commerce Insurance Co. found itself facing not only established companies in the market, but a slew of new entrants. By 2010, there were 32 writers in Massachusetts, according to BestLink.
These new entrants in a new system were one of the biggest challenges faced by insurers already in the market, said Rich Attanasio, vice president of property/casualty ratings at A.M. Best (Best’s News Service, Feb. 13, 2012). These old companies were used to the prior system, knew how it worked and now had to adapt to a different environment.
Jaime Tamayo, Mapfre USA president and chief executive officer, said Commerce has met that challenge.
“We believe that our customer-centric philosophy will allow us to maintain and grow our leading private-passenger automobile and homeowners market share within the state,” Tamayo said in an email.
In addition to partnering with independent agents, the company is “in the process of heavily increasing our presence on the Internet,” he said. Tamayo said the company’s web presence allows policyholders to manage and view their policy and claim information, in addition to getting quotes or buying a policy.
On the claims side, the company looks to “ensure that when the rubber meets the road, our customers get a fast resolution of their claim,” Tamayo said.
So far, Mapfre’s Commerce has maintained its top spot. The company had 31% market share in 2008, the year of the reforms, according to BestLink. In 2010, this had shrunk slightly to 28.2%, but the company is still the largest writer by far.
The company benefits from an in-depth understanding of the marketplace, an extensive underwriting database and the ability to effectively compete in the affinity-group marketing environment, according to BestLink. These competitive advantages enabled the group to compete for insureds by applying rate deviations to more desirable drivers and discounts to affinity groups. However, future underwriting results are expected to be highly influenced by the group’s ability to continue to effectively compete within the managed competition market in Massachusetts and, as a member of the Mapfre organization, successful execution of its plans for expansion outside of the state, according to BestLink.
Tamayo called the reforms a great success, noting they allow “more room for companies to offer innovative coverages, services, and policy benefits as we compete for business.” This flexibility allows companies to distinguish themselves in the marketplace, he said.
Mapfre would like to see some additional loosening of regulations in the commonwealth. “In any competitive market, price agility and speed to market for new product offerings are essential for insurers to succeed in attracting and retaining profitable business,” Tamayo said. “Any progress towards greater flexibility in pricing and product offerings will always be welcomed by us.”
Commerce was acquired by Mapfre S.A. in 2008 (Best’s News Service, June 5, 2008).
Commerce Insurance Co. currently has a Best’s Financial Strength Rating of A (Excellent). In December, A.M. Best Co. downgraded the financial strength rating to A (Excellent) from A+ (Superior) of Mapfre USA Group and its lead company, Commerce Insurance Co. (Best’s News Service, Dec. 16, 2011). This followed a rating downgrades for its parent company, Mapfre S.A. The rating actions were driven by Mapfre S.A.’s exposure to the continuing negative developments regarding the eurozone sovereign debt crisis and the action A.M. Best Europe – Rating Services Ltd. has taken with regard to a number of European (re)insurers. In addition, Mapfre S.A., continues to have exposure to investments in several peripheral eurozone economies, in particular Spain and Portugal, and is compounded by Mapfre S.A.’s exposure to commercial property in Spain through its investment holdings. The rating remains under review with negative implications while A.M. Best examines Mapfre S.A.’s exposure to a prolonged adverse economic environment within the eurozone.
The top five writers in the state for 2010 by direct premium written, according to BestLink, were Mapfre, with 28.20% market share; Safety Group, with 11.16%; Liberty Mutual Insurance Cos., with 11.07%; Arbella Insurance Group, with 8.94% and Plymouth Rock Co., with 5.89%.
(By Rick Cornejo, managing editor, BestWeek: rick.cornejo@ambest.com)BN-NJ-02-14-2012 1541 ET #
