Keene, N.H. (June 19, 2008) – Peerless Insurance, a Liberty Mutual Agency Markets regional company, this week issued its first Massachusetts personal auto insurance policy in more than twenty years.

After announcing last November its intention to re-enter the Massachusetts marketplace under the new managed competition auto insurance system, Peerless Insurance issued its first auto policy through Berkshire Insurance Group, Inc. an agency in western Massachusetts with ten full-service locations.

“We are absolutely delighted to be back and look forward to providing consumers with another quality choice in the marketplace,” said Michael Christiansen, president and chief executive officer, Peerless Insurance. “Based on our success and tradition in the Northeast, we know the value our customers place in working with our independent agents to understand and choose their coverages.”

In addition to offering competitive rates, Peerless Insurance will provide substantial discounts to its new policyholders, including account credits for auto (15%) and home (10%), and auto discounts for annual mileage, driver training, driving years, good students, multi-car, and tenure. All auto policies come with a Special Provisions Endorsement, which provides New Car Replacement and Mechanical Parts Replacement for no additional premium. The company also offers first accident forgiveness, diminishing deductibles, and a package of enhanced coverages with its Ultra-Plus Endorsement.

Peerless Insurance has approximately 250 agent locations throughout Massachusetts. The company is piloting its personal lines offerings this month and anticipates rolling-out its products and services to the full agent force in early July. Mr. Ross Gorman, president, Berkshire Insurance Group, issued the company’s first policy, as one of ten piloting agencies.

“Peerless has a great track record for making it easy for us to quote and issue business on the commercial side, and we are thrilled they are making the same technology investment for personal lines in Massachusetts,” said Mr. Gorman, who has been a Peerless appointed agent since 2001.

In addition to plans to increase its agent force in the coming years, Peerless Insurance intends to add as many as forty Massachusetts-based employees to its claims, underwriting, marketing, and information technology operations between now and the end of 2010.

In its eight state Northeast territory, Peerless Insurance ranks eighth for personal lines market share among companies that sell products through independent agents. In 2007, the company wrote more than$1 billion in commercial and personal lines premium in its territory, with approximately $67 million in commercial lines premium in Massachusetts.

Consumers who would like a rate quote or wish to learn more about Peerless Insurance products and services can go to www.peerless-ins.com and locate an agent from the search engine on the home page. Agents who are interested in obtaining an appointment with Peerless Insurance may contact Mr. Robert Rooney, vice president, Marketing at 603-358-4453 or Mr. Tim Hall, regional vice president, Massachusetts at 603-357-9520.

About Peerless Insurance

With underwriting companies dating back to 1901, Peerless Insurance offers property and casualty products, including a comprehensive set of personal and commercial coverage, distributed only through appointed independent agents. Headquartered in Keene, New Hampshire, Peerless Insurance offers insurance products in Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont.

Peerless Insurance is part of Liberty Mutual Agency Markets, a business unit of Liberty Mutual Group, consisting of property and casualty and specialty insurance carriers that distribute their products and services primarily through independent agents and brokers. Liberty Mutual Group ranks 94 on the Fortune 500 list of the largest U.S. corporations based on 2007 revenues. The company has financial strength ratings of A (Excellent) from the A.M. Best Company, A2 (Good) from Moody’s Investors Service, and A (Strong) from Standard & Poor’s.

Auto Insurance Savings Tips from Consumer United

Bay State consumers mistakenly believe they have no control over the cost of their auto insurance. Not true. As of April ‘08, drivers in Massachusetts now have the opportunity to lower their auto insurance premiums by shopping around, driving safely and taking advantage of group discounts.

Still, there’s always room for more savings. Here are our top 10 ways to reduce your auto insurance rates.

* JOIN A GROUP
Are you a member of a credit union or civic organization? In recent years, many insurers have offered discounts to groups to attract new customers. As a member of the Consumer United network, you will be able to save 10% off your car insurance rates.

* BUNDLE YOUR PLANS
Insurance companies that offer other kinds of coverage, like home or life insurance, can be a source of additional savings. For example, Consumer United members get 20% off Bunker Hill home coverage rates if they sign up for Plymouth Rock auto insurance.

* EXCEL IN COLLEGE
As a Consumer United member, Plymouth Rock offers an additional 5% off to college students who maintain a 3.0 GPA or B+ average while in school. To receive the discount, submit your transcript to Consumer United when signing up.

* TAKE DRIVER’S ED
Insurance companies usually cut customer rates for those who have completed a driver’s training, or driver’s ed, program. Plymouth Rock offers an additional 5% reduction in rates with standard driving training. To qualify, the customer must provide a certificate of course completion.

* DITCH TOW SERVICE
If you’re already a member of an auto club like AAA (American Automobile Association), there’s a good chance you already have access to free tow service. Cut the option on your insurance and save some cash.

* ASK FOR SENIOR DISCOUNT
If you’re at least 65, you’re eligible for 25% discount on your premium, according to the Division of Insurance. To qualify, you must have at least six years of driving experience and your car must be for personal use, not business travel.

* CUT PERSONAL INJURY
According to the Massachusetts Division of Insurance, it might be worth reducing the personal injury coverage of those named on your auto insurance policy, especially if you already have medical and disability insurance.

* RIDE THE T
If you take the bus or T to work on a regular basis, and your car stays in the driveway, most insurers offer a premium discount of as much as $75.

* DROP COLLISION
Are you driving an older model car? If so, you may want to kick your collision coverage to the curb. Before you shop for insurance, find how much your car is worth using a service like Kelly Blue Book.

* ENSURE MULTIPLE CARS
Some insurance companies will extend discounts on some fees to customers who buy coverage for more than one vehicle.

Boston.com

Let’s all pity the poor auto insurance companies, who are now suing the state insurance commissioner because they don’t like having to compete against “foreign” (i.e. non-Massachusetts) insurance companies (”Insurance commissioner sued,” June 6).

Arbella hasn’t complained over the past 30 years, during which they were protected from having to compete against other insurance companies.

What’s the “right” way to handle auto insurance?

Let the free market do it.

Let every auto insurance company in the country offer their policies to me.

Let me choose which one I want.

Let competition drive down the price.

Let me not have to support a government bureaucracy (the state commissioner of insurance) with my taxes.

Let me not have to pay “as much as $150 a year” in order to subsidize the coverage of “undesirable drivers”.

What about “undesirable drivers?” If my driving record is so bad that no insurance company desires to insure me, then it is morally wrong for me to use the government to coerce you to subsidize my insurance. If I can’t improve my record, or if I can’t afford the price of an insurance policy, then I have no right to drive.

Robert Allan Schwartz, Lexington

www.insurancejournal.com

June 6, 2008

Massachusetts insurance agents and one of the state’s biggest auto insurers are going to court seeking to overturn rules that they say give new carriers an unfair advantage under the state’s new managed competition system.

They are also challenging a rule they claim denies independent agents’ their rights to ownership and commissions on some high risk policies.

The Arbella Insurance Group and the Massachusetts Association of Insurance Agents (MAIA) filed a complaint in Suffolk County Superior Court alleging that Insurance Commissioner Nonnie Burnes has wrongly allowed new out-of-state companies to do business in Massachusetts under different rules than those domestic insurers must follow. They allege that action by the Burnes gives foreign insurance companies an unfair advantage when competing for business in the state.

“We take this action reluctantly, but it is important to protect our agents and consumers from the imbalance being created by the commissioner’s decisions,” said John Donohue, chairman and chief executive of Arbella, the state’s third-largest auto insurer. “Arbella can compete with anyone in this market on price and service and reliability. But the playing field has to be level. There is no justification for letting new foreign companies that produce few jobs escape the rules by which domestic insurers must live.”

The court appeal, which asks for declaratory judgment, targets several rules approved in a May 6 decision by Burnes that had been questioned by agents and some domestic carriers.

That May 6 ruling approved a two-year period during which new carriers are free from having to assume their share of losses and costs of the state’s assigned risk plan, the Massachusetts Assigned Insurance Plan (MAIP), where the industry shares policies insurers do not write voluntarily. The controversial rule (Rule 30) violates state law that requires all auto insurance companies to equitably participate in the plan to write insurance for high risk drivers, according to Arbella and the agents.

When she approved the two-year rule — which she reduced from an original proposal of three years — Burnes noted that other states allow a similar grace period for new entries. She said the two-year rule would align the state with 40 other residual markets throughout the country. She dismissed calls for eliminating the delay altogether.

Critics at that time, including established carriers Arbella, Plymouth Rock and Encompass, complained that the rule would give new carriers a “free ride” at their expense. The newcomers would be able to price their policies without factoring in the cost of high risk drivers, a cost that one estimate pegs at as much as $100 per policy, they argued.

But Burnes said the critics’ analyses were not balanced, “less than candid” and “naive” about the realities of the market.

“The substantial start-up costs, including marketing and infrastructure expenses, that are involved in establishing a business, particularly in a newly competitive and somewhat idiosyncratic market, make it highly unlikely that any new entrant will not have a long-term commitment to our market,” Burnes said in her May 6 order.

“Indeed, a prudent insurer’s rate structure will anticipate the imminent burden of assignments; if it fails to, the company will be faced with the unsavory prospect of requiring rate increases after only two years in the market,” she continued.

She also said that the companies that oppose any delay in eligibility for MAIP assignments “conveniently fail to acknowledge” that the state has long had a reprieve period for new entries.

However, the plaintiffs point out that while other states permit a 24-month lag before risks are assigned to new entrants, those states also allow insurers to price their high risk policies depending on the level of risk. In Massachusetts, there is a 10 percent increase cap on high-risk policies. Therefore, existing companies are required to subsidize the cost of these high-risk policies while new entrants have no such restriction, they argue.

The complaint further alleges that based under the commissioner’s application of the “take all comers” rules, some insurers can reject business that other insurers must write. Thus, existing insurers will be required to incur the expenses and penalties associated with accepting all applicants and renewing certain classes of applicants, while new companies may simply reject applicants they choose not to write.

The plaintiffs contend that this interpretation could pose barriers for some seeking access to auto insurance, as well as open a loophole in which some applicants for insurance in the assigned risk market will end up paying more for their insurance in violation of the state’s uniform pricing requirements.

Burnes has dismissed those complaints, too.

“Every driver who cannot obtain insurance on a voluntary basis during the transition year is guaranteed insurance either through an exclusive representative producer or through the MAIP,” she wrote on May 6.

Through March 31, 2009, a carrier considering a MAIP-ineligible risk from a producer who is not an ERP may either write it voluntarily, elect to write the risk and cede it to the reinsurance facility (CAR), or decline to write it. So no MAIP-ineligible risk will be unable to buy insurance, the commissioner concluded.

Another part of the complaint alleges that the May 6 decision violates state law requiring insurance companies to recognize and to pay a fair and reasonable commission to brokers or agents who are the producers of record on auto policies. Producers had complained about this Rule30C, which requires a carrier that decides to write an assigned risk policy voluntarily to pay the producer of record for that risk a commission but only until 2011. Producers have argued the commission should be paid until the policyholder leaves the producer’s agency but Burnes declined to change the rule in her May 6 order.

Agents contend that this rule deprives them of their ownership of expirations, including their exclusive right to use certain information contained in insurance policies and be paid a fair and reasonable commission on business they produced.

The agents had previously said they would ask the state Legislature to overturn this rule but have now decided to also go to court over it.

“Our agents are learning to live in this new age of ‘managed competition,’ and we support the overall objectives of reform,” said MAIA president and chief executive officer Frank Mancini. “But it’s unfair to allow companies to simply ignore agent ownership rights and deprive them of commissions.”

From WBRU

Despite the high cost of energy these days, there is some good news on the insurance front. The deregulation of the auto insurance market in Massachusetts has meant an unexpected break in the constantly rising premiums for homeowner’s policies. State Insurance Commissioner Nonnie Burnes says insurers now competing for auto business are lowering homeowners policies for consumers who buy both types of coverage from the same company. The reductions have ranged from three to 20-percent. For the first time in more than 30 years, insurers are now allowed to compete for auto insurance business in Massachusetts, and that has brought more companies into the state.

Worcester Telegram Editorial

Auto insurers’ lawsuit is premature at best

A lawsuit filed Friday in Suffolk Superior Court to overturn a key provision of the state’s new “managed competition” approach to auto insurance, while not wholly without merit, regrettably illustrates Voltaire’s maxim that “the perfect is the enemy of the good.”

Arbella Insurance Group, joined by the Massachusetts Association of Insurance Agents, takes aim at state Insurance Commissioner Nonnie S. Burnes, whose rules permit insurers from outside Massachusetts to enter the market here without having to face the prospect of covering the most risky drivers. They say that Rule 30, which grants newcomers a two-year grace period from writing some high-risk policies, is inequitable to those companies who have been doing business in the state all along.

Their claim may carry some weight, but the long-awaited arrival of competition — a feature absent for the last 30 years — should weigh much more heavily in the scales of justice.

It is no small achievement to move from what former Gov. Mitt Romney once dubbed a “Soviet-style” auto insurance market to one in which companies compete. A grace period for new entrants to a market has been a common feature in many states’ reform efforts. While a level playing field is the ideal toward which the state should move, attracting enough players to make the game meaningful has to come first.

Ms. Burnes displayed both common sense and political courage in pushing ahead with auto insurance reform. The new system is still in first gear, and we hope the courts recognize that a short-lived inequity should not be grounds for undercutting reforms for which consumers have waited decades.

Massachusetts drivers are increasingly going green as the number of registered hybrid vehicles in the state has increased by 36 percent during the past nine months.

The timing couldn’t be better for those drivers as the state’s new managed competition system for auto insurance allows them, for the first time in state history, to take advantage of auto insurance discounts created especially for hybrid drivers from insurers such as Travelers of Massachusetts.

According to the state Registry of Motor Vehicles, there are currently 22,353 registered hybrid cars in Massachusetts, up from 16,477 in July of 2007, for an increase of 36 percent.

Travelers introduced the hybrid discount option to stay ahead of one of the fastest-growing markets in the industry.

“Travelers of Massachusetts is pleased to offer a discount up to 10 percent on auto insurance to Massachusetts’ hybrid drivers,” says Dick Welch, president of Travelers of Massachusetts. “Ever since Travelers wrote the nation’s first automobile policy back in 1897, the company has been committed to meeting the evolving needs of the consumer with innovative insurance products. Protecting the environment and conserving natural resources are important principles to us and Travelers of Massachusetts is proud to do our part to encourage the use of fuel efficient vehicles.”

To learn more about the hybrid discount, Travelers has launched a Web site specifically for hybrid enthusiasts at www.hybridtravelers.com. The site features federal and state incentives for hybrid owners and information on how to take advantage of the hybrid discount.

For more information, visit www.travelersma.com.

From the Wall Street Journal

Remarkable news from Massachusetts, of all places. Car insurance premiums are going down. For three decades a Bay State regulator has set the price of car insurance, leading to an annual tussle between insurers and consumer groups over the size of the increase. This led to some of the highest insurance rates in the country.

Because there was no price competition, some of the biggest insurers wouldn’t do business in the state. During this exercise in central planning, the number of insurers dropped to 18 last year, from more than 70 three decades ago. But as of April 1, the state government decided to try a little experiment in the free market. We do mean little - proposed premiums must still be filed with the regulator, who can approve them or not. And many factors used to set rates in other states - such as credit history - are barred.

Even so, this modest experiment in price competition is already working to reduce costs for consumers. Progressive, the third-largest insurer in the country, entered the market May 1 with rates that are on average 18% below the old price-controlled rates. Overall, premiums in the state are due to fall nearly 8% this year as insurers adjust to a world in which they need to compete to attract customers instead of bargaining with their regulator for price hikes. Imagine: When you remove price controls, supply increases and prices fall.

Massachusetts calls this new regime “managed competition” and the early returns already suggest that it beats central planning by a mile. A little less management and a little more competition would produce even more dramatic results. But this is still Massachusetts we’re talking about.

From Travelers Insurance
Free Enhanced Auto Coverage & Increased Pay-in-Full Discount

Travelers of Massachusetts is committed to bringing you value added coverage at great rates. Effective May 1st we will provide FREE enhanced coverage for all auto policy holders!

A new endorsement expands coverage for all eligible insureds

The new endorsement will be applied to all eligible policies — at no additional premium — including policies in-force prior to 4/1/08.

For any loss occurring on or after 5/1/08, regardless of policy effective date, we have added the following:

• New Vehicle Replacement Cost
• Airbag Replacement Coverage
• For vehicles repaired within ConciergeCLAIM
  • Expanded Original Equipment Manufacturer’s Parts (OEM)
  • Enhanced Mechanical Parts Coverage
  • Enhanced Substitute Transportation Coverage

We’ve increased our Pay-in-Full discount!

For policies effective 5/1/08 or later, eligible customers will now receive a discount of up to 3% on specified coverages.

Contact your independent insurance agent for more information about our program guidelines and discounts.

From Insurance Journal Online

By Andrew G. Simpson
May 8, 2008

New carriers in the Massachusetts auto insurance market will be exempt from high risk assignments for their first two years under an amended rule approved by Massachusetts Insurance Commissioner Nonnie Burnes.

The original rule had permitted a delay period of up to three years for new entries and was criticized by some existing carriers as unfair to them.

Rule 30 of the Massachusetts Assigned Insurance Plan (MAIP) establishes a timeframe for determining when a new carrier qualifies to become an assigned risk carrier (ARC) and must begin accepting assigned risk business. The original rule required a carrier reporting more than $100,000 in premiums or $50,000 in paid losses to file its statistics no later than the December of the second year after it reaches one of these thresholds, a delay that could be up to three years.

After hearing complaints from existing carriers in the state, Burnes issued a decision on May 6 that this potential three-year delay is too generous and reduced it to a maximum of two years during which a new entrant will not receive an ARC assignment from MAIP.

She said this policy aligns the state with 40 other residual markets throughout the country that permit a two-year lag between entry into the market and assignment of residual market risks.

She dismissed calls for eliminating the delay altogether.

Critics, including established carriers in the state Arbella Mutual, Plymouth Rock and Encompass, said the rule would give new carriers a “free ride” at their expense. The newcomers would be able to price their policies without factoring in the cost of high risk drivers, a cost that one estimate pegs at as much as $100 per policy, they argued.

But Burnes said the critics’ analyses were not balanced, “less than candid” and “naive” about the realities of the market.

“The substantial start-up costs, including marketing and infrastructure expenses, that are involved in establishing a business, particularly in a newly competitive and somewhat idiosyncratic market, make it highly unlikely that any new entrant will not have a long-term commitment to our market,” Burnes said in her May 6 order.

“Indeed, a prudent insurer’s rate structure will anticipate the imminent burden of assignments; if it fails to, the company will be faced with the unsavory prospect of requiring rate increases after only two years in the market,” she continued.

She added that her departmentI would be checking all rates to make sure they are adequate.

Burnes also said that the companies that oppose any delay in eligibility for MAIP assignments “conveniently fail to acknowledge” that the state has long had a reprieve period for new entries.

Under the approved rule, once a company is eligible to receive MAIP assignments, its share will be calculated on the same recent twelve-month basis, updated monthly, as other carriers’ share. Thus the MAIP ‘brings a new entrant up to par with existing companies immediately,” she maintained.

In the May 6 order, Burnes addressed several other assigned risk rules that some carriers and producers had questioned.

Rule 21 establishes the timetable for identifying the type of risks that may be placed in the MAIP during the first year ending March 31, 2009. Some critics had suggested it failed to guarantee access to insurance for some drivers. But Burnes found otherwise. “Every driver who cannot obtain insurance on a voluntary basis during the transition year is guaranteed insurance either through an exclusive representative producer or through the MAIP,” she wrote.

Through March 31, 2009, a carrier considering a MAIP-ineligible risk from a producer who is not an ERP may either write it voluntarily, elect to write the risk and cede it to the reinsurance facility (CAR), or decline to write it. So no MAIP-ineligible risk will be unable to buy insurance, the commissioner noted.

Rule 29 clarifies that risks insured through group marketing plans may not be placed in the MAIP. The carrier must provide the risk with a voluntary policy. The rule was amended, however, so that carriers will receive voluntary credits for these group policies.

Producers had complained about Rule30C, which requires a carrier that decides to write a MAIP risk voluntarily to pay the producer of record for that risk a commission. The commission obligation ends in 2001. Producers argued the commission should be paid until the policyholder leaves the producer’s agency. But Burnes declined to change the rule.

She also rejected a request from direct writers that they be allowed to assign selected producers to handle assigned risk business rather than being required to have all of their producers in the state trained to handle assigned risk business.

Finally, she upheld a rule that allows MAIP member carriers with Limited Assignment Distribution Agreements with other carriers to service all of their assigned risk business to charge the LAD’s rates rather than the voluntary rate of the member carrier itself.

The law on high risk premiums, known as the Lane Bolling amendment, guarantees a high risk will be charged a premium that is no greater than the premium charged by a servicing carrier. But, Burnes concluded, it does not guarantee assignment to a particular servicing carrier or its rates.