SDIP Question

    Posted by MAIA on Jun 12, 2019 12:01:00 AM

    QUESTION

    This question was answered based upon current rules, regulations & statutes in effect on May 03, 2019

    I was curious if you could answer a question for me.  We have a policyholder whose current policy has a 3 point surcharge on it and would be a points 98 at renewal come 03/2020.  He’s replacing his vehicle now and instead wants to cancel the current policy and have us write a new policy for his new vehicle so that it’ll be issued at points 98 instead.  We don’t allow an Insd to manipulate the situation to avoid SDIP charges.  I’m curious to know if this is a state regulation or maybe just State Farm’s standpoint.  Our underwriting department referred me to ask the state.

    I’d appreciate any feedback you have.

    Thank you

    ANSWER

    Kathy Cormier:  Prior to competition in Massachusetts there was a section in the Rule manual under Rule 18: Cancellations that stated:

    No policy in effect prior to a rate level revision shall be endorsed or cancelled and rewritten to take advantage of such a revision or to avoid the application of such a revision.

    There was nothing in the rules that stated you couldn’t cancel and rewrite because of a change in SDIP.  This is your companies decision, but that does not mean that the client can’t replace the coverage with another carrier if your company chooses not to do this.  After competition started in MA that language above was removed from the rule.

    I hope this helps.

    Company:  Extremely helpful Kathy, thank you so much for getting back to me.

    This document is not a legal opinion and should not be relied upon as such. The intent of this document is to provide a general background regarding the topic or topics discussed, not to provide legal advice. Producers and agencies should consult an attorney regarding specific situations and specific questions with respect to the topic or topics covered in this document. Neither the Massachusetts Association of Insurance Agents, Number One Insurance Agency nor any of its employees shall be responsible for any errors or omissions regarding any statements made in this document, nor any errors or omissions regarding any statutes, regulations, court rules, and/or any other government documents cited in this document.

    Topics: Personal, 2019

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