Growing up in the 70’s I was addicted to Bonanza, The Big Valley & The Lone Ranger. I fancied myself a cowboy. A Massachusetts cowboy.

Completing my front nine, 43 years later, Idid not become a cowboy.

Instead, I became something better: a Massachusetts independent insurance agency owner!

Two years ago “managed competion” auto insurance entered the state of Massachusetts. It’s been just like the Wild West of my childhood imagination.

First, companies gave out appointments to agencies. Next, they lowered rates & offered additional discounts & broader insurance programs. More companies entered the state including: Allstate, Progressive & Geico.

Companies lowered their rates & offered additional discount & insurance programs.

As an independent agent, writing with many different companies, competition allows us to flex our rating muscles — or quick draw our six shooter.

16 years ago, when I entered the family insurance business it was a different world. A wife, a home, a mortgage, and 3 kids later, I feel old saying that. It was a different world. We had a computer for word processing and we had type-writers. The internet was a silly word used by technology companies. Nothing for insurance agencies to concern ourselves with. Applications were taken by hand and computations were manipulated with the help of rate manuals. Endorsements were mailed in and suspended in our file cabinets. At considerable expense, insurance agents have had to keep up with companies’ advancing technologies. The expense has come in hardware form and in an even more challenging, learning curve form. Senior partners that had never uded a computer are now being required to enter endless amounts of ursername & passwords, uploads & downloads, input & output, real-time , e-mail and pdf.

Still, these technologies have been a good thing. Agencies are now able to handle greater volumes. Work flows continue with new & greater efficiencies.

Coming soon: Electronic, Stamped RMV Forms.

We recommend that parents, in order to best protect assets, consider registering and insuring a vehicle in their child’s name.  In Massachusetts parents are provided 100% insulation from lawsuits arising from bodily injury or property damage claims.

Mass. MGL Chapter 231, section 85A: “If a car is registered to the child and the child gets into an accident causing personal injury and/or property damage, there is no reponsibility on the parent. It does not make any difference who bought the car or who pays for the insurance, or how old the child is so long as we are talking about negligence.”

On this basis it might make sense for parents to consider insuring a vehicle in their child’s name.

As recently published in “The Massachusetts Agent” (Official Newsletter for The Massachusetts Association of Insurance Agents):

MAIA Files Another Complaint About Progressive Business Practices … 

MAIA has filed a second complaint about the business practices of the newest private passenger auto insurer, Progressive Direct. The letter of complaint, filed with both the Commissioner of Insurance and the Office of the Attorney General, outlines five different areas of concern including:

1. Transfer of Insurer: The complaint explains that in many cases, Progressive has not issued the Notice of Transfer of Insurer (Form 2A) prescribed in their manual (Rule 4. Standard Procedures, D. Transfer of Insurer). In lieu of the Form 2A, Progressive is issuing a Verification of Insurance form. This form is not “signed by the producer of record and certified by affixing the company stamp of the new carrier” as required by their rule. In those cases where Progressive has issued the Form 2A, none of the forms we’ve reviewed were signed. Rather, the Form 2A has the name of the Progressive producer typed in a script font above the insurance stamp. In addition, many of Form 2As as well as the unacceptable Verification of Insurance forms are sent to the former carrier and not to the producer of record as required by their rule.

2. Issuance of Policy to Persons Without an Insurable Interest in the Vehicle: In several instances, we have observed that Progressive has issued policies in the name of a listed operator who does not own and has no insurable interest in the vehicles being insured. In some of these cases, there were loans on the vehicles and the named insured on the Progressive policy is not a party to the loan. Furthermore, Progressive issued either a Form 2A or a Verification of Insurance to the previous company, in essence, cancelling the vehicle owner’s policy and in many cases putting the owner in violation of his/her finance agreement with the lienholder. The owners of the vehicles were not alerted to the situation until the former agent of record followed up on the change with the vehicle owner.

3. Registry Paperwork: The most recent complaint we’ve received was from a member who had a new customer come in and purchase a policy and register a vehicle. After seven days, the agent received notice from Progressive indicating that they had issued a new policy. When the agent followed up with the client to determine why he had switched to Progressive, the agent was told that it was “more convenient” to buy a policy and get the vehicle registered immediately than to wait for the Registry paperwork to be mailed by Progressive. We are not suggesting that Progressive is suggesting this course of action, but we feel that any company writing auto insurance in MA without any local representatives in the state should be cautioned that this procedure is not an option.

   NOTE: As we went to press with this edition of The Massachusetts Agent, we received additional complaints from MAIA members indicating their clients were informed that they can get the RMV paperwork done by us [the local agent] quickly and then they’ll “2A it to Progressive.”

4. Misleading Quotes: MAIA provided documentation of an online quote and the subsequent policy declarations page that caused great concern. The initial quote for a six-month policy was $291. The actual premium for the policy issued as a result of the quote was $1,584. The only change on the policy that might increase premium was a change in Part 4 limits from $50,000 to $100,000 (normally resulting in an increase in premium of about $1). The big difference in premium appears to be that the online quote did not include any merit rating surcharges for the applicant who had 8 points. There was no indication that the premium may change as a result of the applicant or any listed operator’s driving record or any other information that may impact premium. In our opinion, quotes of this type are incomplete, deceptive and misleading. We are certain that when the consumer purchased this policy, she had no idea that the true cost of the policy would be five times the amount of the original quote.

5. Policy Term: I have included below the text of an email from Progressive which explains their stance on policy terms:

   “Thank you for contacting us. We appreciate you taking the time to obtain a quote. I received your request for a 12 month quote. Unfortunately, we must sell the policy as a six month policy and then we can change the policy to a 12 month policy. The premium for the 12 month policy will be twice the six month rate. Based on the quoted six month rate, your 12 month rate would be $618.00.

   “I hope you find this information helpful and I look forward to assisting you in the future. If you have any additional questions or concerns, please feel free to reply to this e-mail or contact us at 1-800-PROGRESSIVE (1-800-776-4737). Our licensed Customer Service Representatives are available 24 hours a day, 7 days a week to assist you.”

It certainly appears that Progressive’s business practices are in direct conflict with your Bulletin No. 2008-07 which provides:

“Insurers may submit a form filing to the Division offering a private passenger motor vehicle insurance endorsement that limits the term of the standard private passenger motor vehicle insurance policy to six months, provided that such form filing includes a process by which the insurer first obtains the written acknowledgement from a current policyholder or a new applicant that indicates that he or she understands that:

“1. the law requires that every insurance company offer twelve-month term private passenger motor vehicle insurance policies at the option of its customers;

“2. a six-month term policy is shorter than a twelve-month term policy;

“3. a six-month term policy will have a premium that is half as much as a twelve-month term policy; and

“4. the premium for a renewal of the policy for an additional six-month term will be based on the rates in effect for that insurance company on the renewal effective date.”

Certainly, no written acknowledgement form is obtained prior to the issuance of a six month policy. As you can see from the language in Progressive’s email, their default policy term is six months.