BOSTON — The state insurance commissioner yesterday approved a new method for assigning high-risk drivers to automobile insurers that would align Massachusetts with most other states — a move fought by Massachusetts' largest auto insurer but embraced by a coalition of rivals.

Commissioner Julianne Bowler said switching to a so-called "assigned-risk" plan would more equitably distribute high-risk drivers among insurers that are reluctant to cover them, while also reducing losses and fraud to help keep consumer rates low.

Her decision caps a four-year-long process that was slowed after Webster-based Commerce Insurance Co. filed a court challenge in January 2005 when Bowler initially approved the plan.

A lower court agreed with Commerce that Bowler needed legislative approval to phase out the current system. But the state Supreme Judicial Court sided with Bowler in overturning the lower court decision nearly four months ago.

At issue is how to help drivers with accident records and traffic violations find coverage that otherwise would be unavailable to them, since insurers are reluctant to cover high-risk drivers. Massachusetts requires all drivers to carry auto insurance.

Bowler's proposal to distribute 180,000 or more high-risk drivers among insurers would assign those customers randomly based on a company's market share.

Currently, Massachusetts assigns agents representing high-risk drivers to insurance companies, and then allows the companies to assign individual drivers into a pool where losses are shared among carriers in the state's so-called "residual market."

The new plan includes a so-called "clean in three" provision to remove drivers from the high-risk pool after a three-year period in which an individual maintains continuous insurance coverage and isn't found to be at fault for an accident or traffic violation.

Critics argue the current system is susceptible to gamesmanship and fraud as drivers move in and out of the high-risk pool, with some companies ending up with a disproportionate share and others dumping drivers they don't want to insure into the pool.

Under the new system to be adopted starting in April, "Companies will now be responsible for all their policies, forcing responsible management of losses and a great incentive to fight fraud in the marketplace, which means a lower rate for drivers," Bowler said.

A spokesman for Commerce Insurance, which covers about one of every four Massachusetts drivers, didn't immediately return a call seeking comment.

Bowler's move was applauded yesterday by the Fairness for Good Drivers Coalition and the Massachusetts Insurance Federation, whose members include Liberty Mutual Group, American International Group and Hanover Insurance.

Forty-three other states already use systems like the one Massachusetts is adopting, those two groups said.

"The structure and unfair operations of the Massachusetts high-risk pool has been a principal reason why two-thirds of the companies that were operating here in 1990 have withdrawn from the market or gone out of business," said James Harrington, executive director of the Massachusetts Insurance Federation and spokesman for the coalition backing the changes.

Bowler's decision yesterday made only slight changes to the system she originally approved in late 2004, including slowing the three-year timeline for implementing the new system.

Harrington said the slowdown will give Gov.-elect Deval Patrick time to analyze the changes. The Democrat takes office next month, replacing Republican Gov. Mitt Romney, who appointed Bowler.

Harrington said he was confident Patrick would agree with Bowler's plan.

Libby DeVecchi, a spokeswoman for Patrick, declined to comment on Bowler's decision "pending further review."

Tomorrow, Bowler is scheduled to release her decision setting auto insurance rates for 2007. Last year, Bowler approved an 8.7 percent cut, for an average annual premium of $1,020 this year.

On the Net:
Insurance Commissioner Julianne Bowler's decision: http://www.mass.gov/doi

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By MARK JEWELL , Associated Press writer

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