The CAR Governing Committee met on Wednesday, June 20, 2018 to review the recommendation from the CAR Commercial Committee. The following topics were voted on unanimously by the Governing Committee:
Standards for Determining and Substantiating Principal Place of Business:
The recommendation of documents which define standards requiring the validation of a risk’s principal place of business, securing a certification by the risk, and conducting audits per Rule 10 of CAR’s Rules of Operation. This will help Servicing Carriers determine the risk’s eligibility in the commercial residual market and validate the risk’s principal place of business.
On a unanimous vote, the committee recommended the Service Carrier Standards for validating the “Nerve Center” Principal Place of Business and the Principal Place of Business Certification Form. Servicing Carriers and Exclusive Representative Producers have received approval to implement these procedures. These forms have been submitted to the DOI to be placed on file for use.
Non-Fleet Private Passenger Type
The committee approved Servicing Carrier and Exclusive Representative Producer standards, a certification form and an operator exclusion endorsement. These tools will be used to validate information provided by a risk in order to determine whether a non-fleet private passenger type risk is eligible for placement in the commercial automobile residual market and to evaluate whether a risk meets the criteria as a business/commercial entity. The certification form will be used for all new business applications, but may also be used for renewal business at the discretion of the Servicing Carrier. These documentation options remove the subjective nature of the current validation processes among service carriers. These forms have been submitted to the DOI to be placed on file for use.
The recommendation was to enhance the existing producer requirements, including those pertaining to work experience, education, production and termination. A new producer will now be required to provide evidence of work experience of a minimum of 12 months (up from 6 months) with a licensed producer or member, with the applicant’s efforts primarily devoted to commercial insurance in Massachusetts motor vehicle insurance market.
This would require modification to Rule 14. Exclusive Representative Producer Requirements and the rule has been modified to include the requirement that the producer must submit completed certification forms(s) as applicable, with the application for insurance.
Covered Autos (Proposed Change - Submitted to the DOI)
The committee recommended the commercial residual market coverage be restricted to those policies written on a specified car basis only, noting that policies written on the Business Auto Coverage Form with designated ISO symbol codes of 1 (any auto) would no longer be acceptable to CAR. This recommendation was made not only to eliminate the potential for additional exposure to the residual market but to ensure consistent procedures among servicing carriers. The residual market coverage is limited to only those policies written on the Business Auto Coverage Form and with designated ISO symbol codes of 7 (specifically described autos), 8 (hired auto), and 9 (non-owned autos). The committee has approved the Rules of Operation, Commercial Automobile Insurance Manual and Manual of Administrative Procedures.