As of today there are only about 4200 Clean-in-Three exposures in the Commonwealth
At last week’s meeting, the CAR Governing Committee voted to extend the provision of Rule 21.D.5 concerning Clean-In-Three Risks for an additional year. The current provision had been due to expire for policies effective April 1, 2014. The rule, however, stipulated that no later than December 1st, 2013, “CAR shall confirm that the end date should be ratified based on a review of current data relating to Clean-In-Three Risks. In 2008 when Managed Competition was introduced to the Massachusetts, the Clean-In-Three Provision was implemented in part to avoid mass non-renewals of insureds that were now in the MAIP.
Since 2008, however, this pool of insureds has dwindled down to a point that as of October 2013, only about 4,200 clean-in-three exposures are now written through 27 Assigned Risk Producers who still do not have a voluntary contract. This number represents one-quarter to one-third of the total exposures written with these producers. During the hearing, it was also noted that since 7 of these ARPs have brokerage agreements, in reality this leaves only 20 ARPs who without either a voluntary contract or a brokerage agreement who write approximately 2,700 Clean-In-Three exposures.
While this number is drastically smaller than the numbers at the start of Managed Competition in 2008, CAR Governing Committee member Sumner Gilman says that preserving the restrictions on the non-renewal of Clean-in-Three Risks is still important. He noted during the meeting that simply eliminating this restriction of the non-renewal of Clean-in-Three would have an adverse impact on the 20 ARPs currently working without a voluntary contract. Eliminating this safeguard, he cautioned, could cause these ARPs to lose potentially up to one-third of their book of business. As such he argued, since the actual number of clean-in-three risks is so small, extending this provision in Rule 21.D.5 for an additional year for the benefit of these 20 ARPs far outweighs any impact industry-wide that would occur as a result of extending this provision.
Agreeing with Mr. Gilman’s assertions, the Governing Committee adopted Mr. Gilman’s proposal with a vote of nine members and one recusal. Whether or not it will continue after this one year extension is less clear.