Auto Insurance Plan Governance

There is no "one size fits all" when it comes to the methods through which plans are governed nationwide. However, alongside the many nuances to each state’s plan are a number of fundamental similarities.

Coverage without voluntary coverage

Every state has a form of a "plan" designed to provide automobile insurance for drivers unable to obtain coverage in the voluntary market. Every company writing auto insurance in a state is a subscriber to these plans and subject to assignments based upon their market share.

In most states, a board of directors -- usually referred to as either a Governing Committee, Board of Governors or Advisory Committee -- is charged with a plan’s administration. The committee is often comprised of a mix of subscriber companies, public members, producer representatives and a representative of the state’s insurance department.

Committee responsibilities

The Committee’s responsibilities generally include:

Manager appointment

In many states the manager is AIPSO. The Manager receives the applications and distributes them to the companies based upon their quota share.

Expense management

Budgets, fund disbursements, and levies of subscribers to fund the annual operating budget.

Rate and rule review

Review to ensure the appropriateness and conformity of rules and rates with statutes or insurance department rules. Also to review the concordance with consumer protection.

Carrier appointment

The appointment of servicing carriers for commercial or private passenger business that companies utilize to "buy-out" of the obligation and expense of creating an infrastructure dedicated to assigned risk.

AutoOne’s role

AutoOne participates in these committee meetings whose deliberations could have an effect on our clients. We currently hold seats on 13 state governing committees, including New York and California. Additionally, we hold the chair of AIPSO’s Residual Market Committee responsible for development of procedures to monitor quota determination and equitable risk assignment, among other things.

While Plan governance among states certainly varies, there are many similarities which can be understood. If you have any questions regarding the operation of any state’s auto insurance plan or who to contact about a particular plan, please contact Pete Treutlein with AutoOne at 631-547-2010 or visit http://www.autooneins.com.

Pete Treutlein, Director,
Assigned Risk Services