2000.09.19 - Records of Meeting



RECORDS OF MEETING

ACTUARIAL COMMITTEE

A meeting of the Actuarial Committee was held at the offices of Commonwealth Automobile Reinsurers, 100 Summer Street, Boston, on -

TUESDAY, SEPTEMBER 19, 2000 at 10:00 A.M.

Members present -

Mr. Arthur J. Remillard, Jr. – Chairman

Commerce Insurance Company

Mr. Geoffrey Arnold Plymouth Rock Assurance Corporation

Mr. Gavin C. Blair Liberty Mutual Insurance Group

Ms. Betsy Branagan * Arbella Mutual Insurance Company

Mr. Edward N. Patrick ** Safety Insurance Company

Ms. Lise Hasegawa *** Metropolitan P & C Insurance Company

Mr. Sumner D. Gilman Economy Insurance Agency

Mr. Christopher A. Najim CNA Insurance Companies

Mr. Michael J. Hussey **** Hanover Insurance Company

Mr. Scott B. Gerlach National Grange Mutual Insurance Company

Mr. David L. Miller CGU

Ms. Kathleen F. Silvia The Fair Insurance Agency

Mr. Richard E. Welch Premier Insurance Company of Massachusetts

* Substituting for Mr. Thomas S. Carpenter

** Substituting for Mr. David F. Brussard

*** Substituting for Mr. Joseph F. Cofield

**** Substituting for Mr. Edward P. Lotkowski

Commonwealth Automobile Reinsurers -

Mr. Michael Trovato Executive Vice President & Treasurer

Mr. Joseph Maher Vice President, General Counsel & Secretary

Ms. Susan Basilesco Director of Financial Services

Mr. Paul Corsetti Director of Communications

Mr. John Metcalfe Director of Administration & Market Relations

Ms. Pamela Wallace Director of Data Quality Services

Ms. Natalie Hubley Sr. Manager of Actuarial/Statistical Services

Mr. Timothy Costain Market Relations Manager

Mr. John DePhillips Actuarial/Statistical Analyst

Also present -

Ms. Katherine Barny CGI Management Consultants

Mr. Timothy Delgrande Norfolk & Dedham Mutual Fire Ins. Co.

Mr. Edward Donahue Morrison Mahoney & Miller LLP

Mr. Peter Drogan Amica Mutual Insurance Company

Ms. Roberta Fitzpatrick Mintz, Levin

Mr. James Fleming Berkshire Mutual Insurance Company

Mr. John Forbes Concord Group

Ms. Paula Gold Plymouth Rock Assurance Corporation

Mr. Nathan LaCombe Plymouth Rock Assurance Corporation

Mr. Louis Poirier Fitchburg Mutual Insurance Company

Mr. Ronald Rainer Amica Mutual Insurance Company

Mr. Peter Robertson Office of Peter T. Robertson

Mr. Leonard Rollins Pilgrim Insurance Company

Mr. Larry Smith A-Affordable Auto Insurance

Mr. Josh Sterling Progressive Casualty Insurance Company

Mr. Robert Suglia Amica Mutual Insurance Company

Mr. Barry Tagen Pilgrim Insurance Company

Mr. Mark Winiker A-Affordable Auto Insurance

Actuarial Committee Chairman Arthur Remillard called the meeting to order at 10:07 a.m.

A.C.

00.01 Records of Previous Meeting

A motion was made by Mr. Gilman, and seconded by Mr. Hussey, to approve the Records of the Actuarial Committee meeting of August 15, 2000. The motion passed on a unanimous vote.

A.C.

04. Amica: Oversubscription Relief

The Actuarial Committee continued its consideration of Amica’s appeal for private passenger ERP oversubscription relief (see attached A.C. 00.04, Exhibits 1-5).

Mr. Gilman noted his business relationship with Amica as it relates to a premium financing arrangement, and questioned whether any parties to the appeal objected to his participation in discussion of the appeal. No objection was raised.

Mr. Peter Robertson, Counsel for Amica, discussed key issues presented in the documentation he distributed at the August 15, 2000 meeting, addressing the questions raised by the Committee. Specifically, the Committee questioned Amica’s practice of referring undesirable risks to its ERPs. Mr. Robertson noted that Amica’s referral practice was put in place based on advice from legal counsel, that the small volume of risks referred to ERPs had no impact on their current subscription level, and that their distribution of Amica’s ERP risks by step, exclusive of A Affordable’s book of business, is consistent with the rest of the industry.

In response to questions from Committee members, Mr. Robertson indicated that, in total, approximately 2200 risks were referred to ERPs, and that Amica would not object to amending their request for relief to reassign their oversubscribed amount, less 2200 exposures.

The Committee then reviewed a copy of Amica’s auto quote system available on the Internet. Mr. Robertson noted that currently the on-line application for rate quotes includes a questionnaire in which potential insureds provide information relative to their prior driving experience. It was further noted that a potential risk indicating prior loss experience is told to telephone for a quote between 8 a.m. and 5 p.m. Monday through Friday. Mr. Ronald Rainer, Senior Assistant Vice President of Amica, added that the purpose of the on-line quote system was to attempt to give the most accurate quote to the potential insured. Several committee members questioned whether this practice of requiring certain potential insureds to telephone for rate quotes represents questionable market conduct on behalf of Amica.

Mr. Robertson contended that if the Committee wished to review Amica’s market behavior, it should do so outside the scope of their review of Amica’s current request for ERP subscription relief. However, after considerable discussion, the Committee members agreed that Amica’s market conduct should be considered by the Market Review Committee in consideration of their appeal for ERP subscription relief. Accordingly, on a motion made my Mr. Welch and seconded by Mr. Blair, the Actuarial Committee unanimously voted to recommend that the Governing Committee refer Amica’s appeal for ERP subscription relief to the Market Review Committee, in light of questionable market conduct issues raised by the Actuarial Committee in their consideration of this appeal.

A.C.

00.06 Private Passenger Policy Year 2001 Rules 11 and 12

Rule 11 and Rule 12 Language

On a motion made by Mr. Blair and seconded by Mr. Arnold, the Actuarial Committee unanimously voted to recommend approval of the attached proposed modifications to Rule 11 and Rule 12 reflecting the Committee’s recommendation relative to the policy year 2001 k factor, excluded classes, miscellaneous private passenger exposure weight and the class and territory credit offer (see attached A.C. 00.06 Exhibit 11).

Other Business

There being no other business to discuss, the meeting was adjourned at 10:55 a.m. on a motion by Mr. Gilman seconded by Mr. Welch. The motion passed on a unanimous vote.

Attachments

Boston, Massachusetts John DePhillips

November 1, 2000 Statistical Analyst

Note: These Records have not been approved. They will be considered for approval at the next Actuarial Committee meeting.

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