• Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Contact Us
  • Sponsor An Email
  • Post A Job
  • Merger & Acquisition Services

Agency Checklists

Massachusetts Insurance News & Job Opportunities

You are here: Home / Insurance News | Massachusetts / Massachusetts Auto Insurance News | Commonwealth Automobile Reinsurers / Assigned Risk Percentage of Mass. Auto Insurance Market Continues Downward Trend

Assigned Risk Percentage of Mass. Auto Insurance Market Continues Downward Trend

November 23, 2014 by Owen Gallagher

A 2009 report of the Division of Insurance stated that “One of the fundamental goals of managed competition” was to have “a small residual market.” Data provided by Commonwealth Automobile Reinsurers (CAR) evidences that the Division seems to be getting its wish. The chart below shows that as the Massachusetts insurance industry began to prepare for managed competition and the advent of an assigned risk system to be implemented on April 1, 2008 the residual market began to shrink from just under 5% of the automobile insurance market to a just a little more than 1.6% of the projected market for 2014.

Residual Market Depopulation 2006-2014
Data courtesy of Commonwealth Automobile Reinsurers

This chart actually shows the tail end of a twenty-five year process of depopulation of the residual automobile insurance market that began in 1988.

The residual market has declined from a one time high of 70% of the personal automobile insurance market to less the 2% today

Depopulation of the residual market became a major political in issue in the late 1980s. The residual market plan established in 1983 for motor vehicle insurance provided for the assignment of each licensed property and casualty insurance producer a Servicing Carrier. This unique in the nation system of assigning agents rather than insurers to a servicing carrier coupled with automobile insurance rates being fixed and established by the Commissioner of insurance annually quickly resulted in a ballooning of the residual market.  By 1988, the residual market totaled an amazing 70% of the total market for automobile insurance in Massachusetts. That year the legislature enacted a reform package to start the process of depopulating the residual market and reducing the number of agents who only had a market for automobile insurance through their CAR assigned servicing carrier. However, the real impetus for a major change to the then existing system came on the last day of 2004, when the commissioner ordered the assigned agent plan phased out by January 1, 2008, to be replaced by an assigned risk plan. An appeal by companies opposed the change to an assigned risk plan to the Supreme Judicial Court failed in 2006, and the assigned risk plan and competive rating began on April 1, 2008.

Assigned risk numbers overall continue to decline

Besides the decline in the overall percentage of the Massachusetts automobile insurance market that makes up the residual market, there is a corresponding drop in the absolute number of assigned risks exposures. Over the course of managed competition the number of assignments has also declined as evidenced by the following chart.

Data courtesy of Commonwealth Automobile Reinsurers
Chart numbers calculated from data courtesy of Commonwealth Automobile Reinsurers

This decline in the absolute number of assigned risk exposures has been coupled with a general increase in the number of overall exposures in the marketplace over a similar period of time. The total automobile insurance market exposures have increased 10% between 2009 and 2013.

Personal Auto policy exposures 2008-2013
Data courtesy of Commonwealth Automobile Reinsurers
Print Friendly, PDF & Email

Filed Under: Massachusetts Auto Insurance News | Commonwealth Automobile Reinsurers

About Owen Gallagher

Owen Gallagher is an experienced insurance litigator as well as a certified mediator and arbitrator who specializes in insurance industry disputes. His interest and affinity for insurance began at a young age working the counter at his father’s assigned risk agency in Roxbury. Over the course of his career, Owen has argued a number of cases in the Massachusetts Supreme Judicial Court and has helped agents, insurance companies, and lawmakers alike with the complexities and idiosyncrasies of insurance law in the Commonwealth.  Owen can be reached here.

Primary Sidebar

Sponsored

Sponsored

MA Division of Insurance Announcements

Latest Agency Sales

Salem Five Insurance Acquires Cavanaugh Insurance Agency

Insurance Agency Mergers & Acquisitions in Massachusetts | Q3-2022

More Agency Sales

Career News

Michael Percy Appointed To Concord Group Board of Directors

Michael Percy Appointed To Concord Group Board of Directors

Layoffs At Two Boston-Based Insurtechs

Layoffs At Two Boston-Based Insurtechs

Massachusetts insurance news, MA Insurance News, Mass. Commissioner of Insurance Gary Anderson, NAIC 2019 Appointments

NAIC Names Its 2023 Committee Leadership

View More Career News

In Memoriam

In Memoriam: Nancy L. Perocchi, 1937-2022

In Memoriam: Peter J. Nobile, Jr., 1931-2022

In Memoriam: Nancy Jane A. Vajcovec, 1947-2022 | Agency Checklists

In Memoriam: Nancy Jane A. Vajcovec, 1947-2022

CAR News

Outgoing Gov Baker Signs Catalytic Converter Bill on Way Out

Road Safety Analysts Put Mass. In “Danger” Zone

Final Look 2022: The Massachusetts Private Passenger Auto Insurance Marketplace

View More CAR News

Massachusetts Law Updates

Insured’s $2 Million Claim For Loss Prevention Costs Scuttled By The Supreme Judicial Court

A look at the Supreme Judicial Court of Massachusetts’ ruling on Ken’s Foods’ common law reimbursement claim.

An Insured’s Underpayment of Loss Lawsuit Over Brookline Building Backfires

The Appeals Court recently affirmed a decision in Anwar Faisal et al. v. United National Insurance Company that reminds one of the saying, “Be careful what you ask for. You may get it.” In this case, the insured sued to get more money on a property damage claim, asking the court to rule on his […]

Failed Foray Into Massachusetts Ends In A Lawsuit For New York Agency Over Its Producer’s Understanding of Salary v. Draw

A case in point about what can go wrong when an agency, its officers, and a producer being onboarded, come to loggerheads and litigation ensues.

Harvard College Sues Zurich to Overturn A Late Notice Denial of A $15 Million Policy Claim

Late Policy Notice to Zurich Leads To Harvard’s Loss of $15 Million in Coverage

Summary Judgement for Zurich effectively dismissed Harvard’s lawsuit by The Court.

More Mass. Law Updates

DOI News

Facts & Figures For New England Insurance Departments & Insurance Producers | 2023

Massachusetts Insurance Commissioner Honored for Exceptional Leadership

DOI: Insurance Companies Must Renew MA Appointments by October 14th

The 2022 Home Insurance Report Part III | Policy Numbers by Massachusetts County

View More DOI News

Insurance Fraud

Walmart Will Pay $500k For Its Failure To Follow Workers’ Comp. Prescription Pricing Procedures

Former Insurance Adjuster Indicted in Connection with Stealing Identities of Four Victims of Merrimack Valley Gas Explosions

Phony Pumpkin Assault Claim Gets 3 Years For Insurance Fraud

Edgartown Masonry Company Owner Indicted for Workers’ Compensation Fraud

More Insurance Fraud News

Footer

Agency Checklists

Contact us

14 Summer Street
Suite 102
Malden, MA 02148
617-598-3800

Advertise on Agency Checklists

We offer a variety of ways to get help promote your company or product.

Announcements
Email Sponsorships
Partnerships
Custom Collaborations

*Affiliate Disclosure

Please note that any of Agency Checklists’ articles might contain one or more affiliate links. This means that any subsequent purchase resulting from these links may result in a commission for us, but at no additional cost to you. For example, as an Amazon Associate, Agency Checklists earns a commission from all qualifying purchases. By working with affiliates we can continue to keep Agency Checklists subscription free. Thank you for your support.

SEARCH OUR SITE

Explore Our Archives

Copyright © 2023 · Agency Checklists · All rights reserved.

 

Loading Comments...