Latest Extension Preserves Group Discounts
On December 31, 2024, Governor Maura Healey signed Chapter 286 of the Acts of 2024, extending the waiver of the statutory 35% membership requirement for Massachusetts group auto and homeowners insurance marketing plans through 2030. Chapter 286 had an emergency preamble making the law effective immediately instead of in ninety days. This new statute amends Chapter 147 of the Acts of 2019, which had previously extended the waiver through December 31, 2024.
Historical Context of the 35% Requirement
The 35% participation threshold for group plans derives from M.G.L. c. 175, § 193R(7). Under the law:
“(7) that such employer, trade union association or organization shall consist of no less than twenty-five members, at least fifteen of whom are residents of the Commonwealth, and that at least thirty-five percent are insured within two years of the effective date of the plan, such percentage to continue so insured at all times thereafter.” (Emphasis added)
This requirement was introduced in 1973 to encourage lower premiums via group marketing plans, while ensuring that only “bona fide” groups qualified—back then Massachusetts followed a “Fix and Establish” rating system in which the Insurance Commissioner set uniform premiums annually.
Growth and Participation Challenges
The Massachusetts group marketing landscape expanded in the mid-1990s when the American Automobile Association (AAA) began offering group discounts through Commerce Insurance. The latest available information shows that by 2016, the number of approved group marketing plans had grown to about 5,500 statewide. Despite this growth, Division of Insurance data from that period showed that:
- Only 5% of 2,000 homeowners insurance group marketing plans met the 35% participation threshold.
- Only 11% of 3,500 auto insurance group marketing plans satisfied the requirement.
For details on these statistics, see Agency Checklists’ article of January 5, 2016. “5500 Discount Groups Avoid 35% Minimum With Last-Minute Law Change.”
Chronic Structural Issues
This example of participation shortfall highlights how many groups struggle to maintain the 35% threshold—despite offering discounts ranging from 1% to 20%, depending on market conditions. Over the past three decades, the Legislature has repeatedly waived the strict enforcement of this statutory requirement, preserving discounts for hundreds of thousands of insureds who might otherwise lose access to group-based savings.
Looking Forward
With the waiver now extended through 2030, lawmakers have again postponed a definitive resolution. Observers might wonder if the statutory 35% requirement should be abolished, given that waivers have, as a practical matter, become the norm. This approach balances preserving group discounts against strictly enforcing participation targets that many plans have historically failed to meet. Whether the rule will be repealed or extended beyond 2030 remains an open question. Still, for now, group marketing plans in Massachusetts can continue operating with the knowledge that the threshold requirement has been relaxed.
