HOUSE DOCKET, NO. 167        FILED ON: 1/11/2011

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 277

The Commonwealth of Massachusetts

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PRESENTED BY:

William N. Brownsberger

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To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:

The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:

An Act to preserve the financial assistance feature in automobile insurance rating.

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PETITION OF:

HOUSE DOCKET, NO. 167        FILED ON: 1/11/2011

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 277

[SIMILAR MATTER FILED IN PREVIOUS SESSION
SEE HOUSE, NO. 3449 OF 2009-2010.]

The Commonwealth of Massachusetts

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In the Year Two Thousand Eleven

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An Act to preserve the financial assistance feature in automobile insurance rating.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
 

SECTION 1.Establishment of a special working commission.

A working commission (“commission”) shall be established, consisting of one or more, but no more than three, individuals representing each of the following groups:

The Office of the Attorney-General;

The Office of Consumer Affairs and Business Regulation;

The insurance companies licensed to do business in the Commonwealth;

The Boston City Council; and,

The Massachusetts Public Interest Research Group (MassPIRG), providing that that or-ganization is willing to be so involved.

In any decisions, actions, and/or votes of the commission, each of the above groups will have equal status, regardless of the number of commission members supplied by that group.

Section 2A of Chapter 4 of the General Laws of Massachusetts, which deals with the rules of conduct of special legislative commissions, shall not be applicable to this commission.

SECTION 2.  Purpose of the commission.

The purpose of this commission shall be to devise a process whereby the internal cross-subsidizing financial assistance feature (“assistance feature”) contained in the former “fixed-and-established” rating system in effect through the year two thousand and seven (2007) CE is main-tained in any and all future automobile insurance rating systems, such as the more competitive rating system currently being developed under the auspices of the Division of Insurance. The commission shall be authorized to contract with recognized established actuarial organizations to develop actuarial analyses as needed.   The commission may invite insurance experts and author-ities, both in-state and out-of-state, to appear before them.

The commission will determine the averages of the assistance feature levels of the years 2004 and 2005 as detailed in Automobile Insurers Bureau Actuarial Notice 04-2, “Subsidies in the 2004 Rates”, February 6, 2004, and Automobile Insurers Bureau Actuarial Notice 05-2, “Subsidies in the 2005 Rates”, February 14, 2005, respectively.  The process referred to above shall be so constructed as to develop overall levels of the assistance feature for all future insur-ance rates at a minimum of three-quarters of those overall 2004/2005 averages, starting with the rates to be effective January 1, 2012.  In addition, no individual policy’s assistance feature will be less than two-thirds of the 2004/2005 level for the effective equivalent of that policy.  

The above-referenced process will also forbid the use of any underwriting procedures that could interfere with the preservation of the assistance feature. 

The commission will publish the results of its deliberations, and will also develop the neces-sary legislation to implement the above-referenced process and to incorporate it into the private passenger automobile insurance system of the Commonwealth of Massachusetts as detailed in Chapters 90, 175, and 175C and elsewhere in the General Laws of the Commonwealth of Massa-chusetts.  The above–referenced publication of the results, and the development of implementing legislation, is to be accomplished within three months of the date of passage of this bill or June 1st of 2011, whichever date occurs later.                                                         

Minority reports may also be produced if so desired. 

SECTION 3.  Funding of the commission.

The commission and its activities shall be funded by an assessment on the automobile insur-ance companies doing business in the Commonwealth of Massachusetts, said assessment to be ten cents ($0.10) per policy in effect as of January 1st, 2011, for a total of approximately four hundred thousand dollars ($400,000). 

The commission may decide on an alternate method of funding its activities provided the alternate method is equally fair and non-discriminatory and will produce similar funding results.

SECTION 4.  The formation of the commission shall take place within thirty (30) days of the passage of this act.