Massachusetts Approves Group Auto Discounts for 2004

A.M. Best

John Hillman

January 9, 2004

BOSTON, Jan 06, 2004, (A. M. Best via COMTEX) -- Massachusetts drivers received another year's approval for group insurance discounts, with a special provision permitting less than 35% group participation.

In a signing ceremony Dec. 31, Massachusetts Secretary of State William Galvin, filling in for Gov. Mitt Romney, who was out of state, approved House Bill 4295, again waiving the 35% participation requirement for group automobile discounts.

This legislation has been signed for the past seven years and allows the Massachusetts Division of Insurance to waive consideration of the 35% participation rule for auto insurance group discounts, said Chris Goetcheus, a spokesman for the division. The statute covering group discounts requires that any group renewed during the year must maintain a 35% level of participation of its membership in the program to be able to continue to receive the discount, he said. The waiver permits the division to give more drivers discounts on their auto coverage, he said.

The division has been reviewing group discounts for the past several months under the assumption that this bill would be signed and made active, Goetcheus said. There were about 1,852 group discounts approved in 2003, with a wide variety of groups receiving discounts of between 2% and 12%, he said. The largest group discount in terms of membership is probably the AAA group, which is insured by Commerce Insurance Co., he said.

"The companies file for these discounts by Jan. 15, and those filings tend to come in close to that deadline each year," Goetcheus said.

Groups can be sponsored by an employer, civic organization, motor club, association, trade union or credit union, according to the division. Consumers are advised to check with agents of several different insurers to learn which groups the insurer has been approved to offer discounts to and the size of the discounts, the division said. Any member of an approved group is eligible for the discount.

Massachusetts is unique in the United States for setting one rate that all auto insurers doing business in the state must use. It reviews the yearly proposal of the Automobile Insurers Bureau through the State Rating Bureau, a consumer-oriented segment of the insurance division.

Insurance Commissioner Julianne M. Bowler recently approved a 2.5% increase in auto rates for 2004. The increase, effective Jan. 1, results in an average increase of $25.51 per vehicle and a statewide average annual rate of $1047.04 (BestWire, Dec. 16, 2003).

However, state Attorney General Tom Reilly filed an appeal of the increase Jan. 5, claiming the methodology used was flawed, with the state's drivers facing an additional $100 million in premium costs as a result of the increase (BestWire, Jan. 6, 2004).

The top five writers of private-passenger auto physical damage in Massachusetts in 2002, according to A.M. Best Co.'s state/line reports, were: Commerce Group, with a market share of 25.5%; Arbella Insurance Group, with 10.5%; Safety Group, with 10.5%; MetLife Auto & Home Group, with 7.9%; and Liberty Mutual Insurance Cos., with 7.3%.

Copyright (C) 2004 A.M. Best