Two Governing Committee Seats Freed Up For Independent Agents At CAR

The Legislature passed, and Governor Baker signed, the state’s Fiscal Year budget authorizing the spending on government goods, services, and programs for the fiscal year 2023, which began July 1, 2022, through June 30, 2023.

CAR, Commonwealth Automobile Reinsurers
Commonwealth Automobile Reinsurers

A $52.7 billion budget is a massive piece of legislation. Large legislation often passes with unrelated laws or appropriations, usually called “riders” attached. In Massachusetts, the Legislature calls them “Outside Sections.”

The $52.7 billion budget carried one-hundred and ninety-three outside sections of legislation with little or no connection with the state’s budget. However, one outside section of the budget did positively affect insurance agency representation on the Commonwealth Automobile Reinsurers (CAR) Governing Committee, thanks to the effective lobbying efforts of the Massachusetts Association of Insurance Agents (MAIA) and its President and CEO, Nicholas Fyntrilakis.

The law change frees up two Governing Committee seats reserved for assigned risk-only producers

The law change concerning the CAR Governing Committee deleted the statutory restriction that reserved two of the six Governing Committee seats assigned to insurance agents to “producers who are assigned risk producers who write private passenger automobile insurance exclusively through the Massachusetts automobile assigned risk plan.”

Since the start of limited competition in 2008 and the return of a healthy Massachusetts voluntary automobile insurance market, producers who “write private passenger automobile insurance exclusively through the… assigned risk plan” have, as a practical matter, disappeared. (Emphasis added).

Governing Committee members appointed by the commissioner of insurance

The CAR Governing Committee manages the commercial automobile pool and the personal lines assigned risk plan. It prepares and files the Plan and Rules of Operation and the adoption and filing of any amendments to the Pan or Rules of Operation.

The Governing Committee should have a balance between insurance company members and agent members. By statute, the Governing Committee has thirteen members appointed by the insurance commissioner: six automobile insurance company members and six members from the associations of insurance producers. The thirteenth member must come from a domestic insurer with less than 2.5% of the Massachusetts automobile insurance market.

Agency designated Governing Committee seats empty for lack of qualified producers only writing assigned risk personal auto insurance

In 2018, the term of the last Governing Committee member who qualified as a producer writing exclusively through the assigned risk plan expired, and he was not replaced. See Agency Checklists’ article of January 29, 2019, “Governor Baker Recognizes Longtime CAR Governing Committee Member Sumner Gilman.” As a result, the two seats set aside for exclusive assigned risk producers on the Governing Committee remained unfilled. The statutory balance between agents and insurers, instead of being seven to six, became seven to four up to the present.

Law change ensures adequate representation of agents and their insureds

During the last four years, the Massachusetts automobile residual market has been relatively stable. However, there is no guarantee that any market will always stay stable. Reestablishing the balance between insurers and agents on CAR’s Governing Committee, as the MAIA-sponsored legislation has, will ensure that Governing Committee will adequately represent the interests of agents and the motoring public.

The outside section allowing the filling of all the Governing Committee seats assigned to agents

The legislation that the MAIA shepherded through the Legislature deleted the language in CAR’s enabling act that carved out a restriction on agent appointments to the CAR Governing Committee. A copy of Outside Section 79 is below.

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