FOR IMMEDIATE RELEASE
Massachusetts Supreme Court issues decision upholding rules granting exemptions from the auto insurance assigned risk plan for new entrants to the market.
Boston, MA (February 16, 2010) -- In response to a complaint brought by Arbella Mutual Insurance Company and the Massachusetts Association of Insurance Agents (MAIA) against former Insurance Commissioner Nonnie Burnes, the Massachusetts Supreme Judicial Court issued a decision upholding the actions taken by Commissioner Burnes instituting managed competition and a residual market assigned risk plan. Specifically, the Court rejected Arbella's arguments that rules delaying the allocation of assigned risks to newly writing companies for a period of two years after their entry into the Massachusetts insurance market exceeded the Commissioner's authority, were arbitrary and capricious and violated proper procedure. Arbella had also challenged the rules relating to the use of Limited Assignment Distribution Agreements (LADA) as being in violation of the statutory prohibition against assigned risk premiums exceeding voluntary market premiums (the Lane-Bolling amendment). The Court held that Arbella did not have legal standing to challenge the LADA rules. Finally, the Court rejected MAIA's arguments that the assigned risk plan rules violated a statute granting agents' ownership of auto insurance policy expirations by not requiring insurers to pay commissions to agents on policies they take out of the plan and write voluntarily.
