Governing Committee Meeting - June 20, 2018

Commercial Automobile Committee
  1. In conjunction with the objective to improve commercial automobile residual market results, CAR committees continue to evaluate opportunities to enhance consistency among Servicing Carriers and Exclusive Representative Producers (ERPs) in managing residual market risks. Accordingly, the Governing Committee approved recommendations as follows:

    • Servicing Carrier and ERP standards to validate an applicant's principal place of business in determining a risk's eligibility for placement in the commercial residual market pursuant to Rule 2 of CAR's Rules of Operation. The standards instruct that Servicing Carriers require, and that ERPs provide, a signed Principal Place of Business Certification Form from all new business applicants. The procedures described in the standards represent underwriting tools and opportunities currently available to Servicing Carriers in evaluating a risk's eligibility. The certification form will become effective 30 days after approval by the Commissioner of Insurance.

    • Servicing Carrier and ERP standards to evaluate whether a non-fleet private passenger type risk is eligible for placement in the commercial residual market. The standards include the use of an operator exclusion endorsement in certain instances, as well as a Non-Fleet Private Passenger Type Certification Form to be submitted with all new business applications. The procedures described in the standards represent underwriting tools and opportunities currently available to Servicing Carriers in evaluating a risk's eligibility. The endorsement and certification form will become effective 30 days after approval by the Commissioner of Insurance.

    • Amendments to the ongoing ERP requirements in Rule 14 – Exclusive Representative Producer Requirements to enhance requisite work experience and to require submission of appropriate certification forms(s) with all new business applications for insurance. This Rule amendment has been filed with the Division of Insurance. Refer to Bulletin No. 1053 for further information.

  2. To eliminate the potential for additional exposure to the residual market and to further enhance consistency among Servicing Carrier procedures, the Governing Committee approved a recommendation that coverage for residual market policies written on the Business Auto Coverage Form be restricted to a specified auto basis only. To that end, Servicing Carriers will no longer be able to employ composite, gross receipts, or mileage based rating options for these policies. Accordingly, the following modifications to CAR rules and manuals were approved:

    • Amendments to Rule 6 – Coverages of the Rules of Operation. This Rule amendment has been filed with the Division of Insurance. Refer to Bulletin No. 1052 for further information.

    • Amendments to Rule 3 – Policies and Coverages, Rule 55 – Premium Development Options for Truckers, Rule 75 – Gross Receipts or Mileage Basis and Rule 126 – Composite Rating of the Commercial Automobile Insurance Manual. The Rule amendments will be filed with the Division of Insurance for adoption with additional information provided to the industry as it becomes available.

    • Amendments to Chapter V – Premium of the Manual of Administrative Procedures, corresponding to the filed Rule modifications.

  3. Modifications to Chapter III, Section B.3. of the Manual of Administrative Procedures to include a Servicing Carrier requirement for reporting a risk that the carrier declines, non-renews or cancels due to ineligibility for coverage in the commercial residual market to CAR's Ineligible Risk Database. The updated chapter is available on CAR's website under the Manuals tab. A CAR Bulletin providing additional details relative to the development timetable and Servicing Carrier reporting instructions will be distributed to the industry in the near future.

Compliance and Operations Committee

The Governing Committee approved the following recommendation:

  • Modifications to Chapter VIII, Section A.3 of the Manual of Administrative Procedures to include reporting requirements for losses that exceed cedeable limits or coverages. The updated chapter is available on CAR's website under the Manuals tab. Refer to Bulletin No. 1054 for further information.

 
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