Hurry up and wait
Local insurance groups wait on details of auto insurance reg. changes
While tentatively supportive of the recent announcement to allow "managed competition" among state auto insurance providers beginning in 2008, Hanover Insurance Group of Worcester and Commerce Group of Webster are waiting on further details from the Insurance commissioner's office before fully analyzing the potential impacts of rate competition.
"In terms of creating benchmarks, the marketplace is awaiting a set of regulations from the commissioner," that will enable insurance companies to better prepare new policies and procedures, said Jim Ermilio, executive vice president and general counsel at Commerce, during a recent conference call with investors discussing the proposed changes in insurance policies in the state.
Sparse details
Because details of the sweeping policy change from state-mandated rates to competitively priced, market-driven rates have yet to be revealed, both companies were vague in their support, but supportive nonetheless.
"The commissioner indicated that she will set forth specific parameters soon," said William J. Cahill Jr., vice president and group counsel for Hanover Insurance. "We haven't heard or seen anything to this point that concerns us."
Frank Mancini, president and CEO of the Massachusetts Association of Insurance Agents in Framingham, said that while large, direct-to-consumer corporations like Geico or Progressive may move into the state, the new regulations may also allow independent, agency-based companies access to new markets as well.
"Yes, there's going to be direct writers, but also a lot of independent insurance agencies can now get back to the state," said Mancini. "There's a number of agencies in the state that write commercial auto insurance, but don't write private passenger auto insurance. We see those slowly coming back into the private insurance market."
Mancini also said he was encouraged by indications that Burnes would not allow things like a driver's credit score, education, or employment history to affect his or her policy. Policies should be based solely on an applicant's driving record, he said.
Gerald Fels, president and CEO of Commerce, said that the new, competitive environment will give Commerce a chance to use its experiences in other states to help bolster its product line in Massachusetts.
"Efforts to diversify outside Massachusetts will continue, and we will continue to build management teams to facilitate those processes," said Fels. "It gives us as an organization a lot more depth as far as dealing in a competitive environment. It gives us a greater opportunity to come up with creative and flexible new policies."
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