RECORDS OF MEETING
MARKET REVIEW COMMITTEE
WEDNESDAY, SEPTEMBER 13, 1995 AT 1:30 P.M.
The following Members were present -
Mr. Louis M. Xifaras Mr. James D. Doherty
Mr. Mark R. Silva Mr. Wayne D. Howard
Mr. Robert V. McGowan Mr. Jay Johnson
Mr. Sumner D. Gilman Mr. Raymond Sirois*
Mr. Edward F. Downey, Jr. Mr. George Peters
Mr. Peter Dignan** Mr. William J. Whitebone
Mr. Thomas Petty*** Mr. Francis D. Gibbons
Ms. Paula W. Gold
* Substitute for Mr. Daniel F. Crimmins
** Substitute for Mr. David H. Cochrane
*** Substitute for Ms. Virginia E. Neill
The following were also present-
Commonwealth Automobile Reinsurers
Administrative Vice President & Secretary Mr. D. I. Jewell
Vice President & General Counsel Mr. J. J. Maher
Vice President - Financial Services Mr. J. V. Kelly
Administrative Manager Mr. J. D. Metcalfe
Director of Communications Mr. P. W. Corsetti
R.P./Servicing Carrier Coordinator Mr. T. J. Costain
R.P./Servicing Carrier Liaison Ms. K. A. Dillon
Market Review Committee
Commerce Insurance Company Ms. Karen Lussier
Arbella Mutual Insurance Company Mr. Al Sarnessian
Ms. Andrea MacKay
Premier Insurance Company Ms. Diane Fortino
Finnegan, Underwood, Ryan & Tierney Ms. Susan Underwood, Esq.
P. Cohen Insurance Agency Mr. Stephen Gutro
Ms. Margaret LaPre
Attorney Mr. Barry S. Scheer, Esq.
Risky Business Magazine Mr. Curt C. Peterson, Esq.
Chairman Doherty called the meeting to order at 1:30 P.M.
M.R.
95.1 MINUTES OF PREVIOUS MEETING
A motion was made by Mr. Gilman and seconded by Mr. Xifaras to approve the Records of the Market Review Committee meeting of August 16, 1995.
The motion carried on a unanimous vote.
M.R.
95.2 GEORGE M. VASQUEZ
Mr. Jorge Elias, representing Mr. George M. Vasquez, requested a hearing to appeal the declination of his application for appointment as an Exclusive Representative Producer by C.A.R. Staff. Mr. Vasquez appeared before the Market Review Committee on March 29, 1995 as a result of an appeal of the declination of his application for appointment based on failure to meet market need criteria (location of the agency was not in an eligible town.) The Committee voted to deny the appeal. Mr. Vasquez' most recent application was denied by C.A.R. Staff for 1) failure to maintain regular business hours and 2) failure to satisfy Staff that business operations are conducted from a town which meets established market need criteria.
Mr. Vasquez withdrew his appeal prior to the meeting.
M.R.
95.3 P. COHEN INSURANCE AGCY./ARBELLA MUTUAL INSURANCE CO.
Mr. Stephen Gutro, of the P. Cohen Insurance Agency, requested a hearing to appeal the termination of his agency's Exclusive Representative Producer appointment by the Arbella Mutual Insurance Company for violation of C.A.R. Rule 13, B, 3, f, 5, "failure to report all coverages bound within two working days." The agency was appointed to Arbella in October 1988 and currently maintains a private passenger book of business of approximately 1900 vehicles.
Mr. Gutro reviewed changes that have occurred at his agency since 1990. He stated that acquisition of another agency, illness and employee turnover had contributed to recent management problems at the agency. He advised he has since implemented controls, which include additional staff and binder logs, to help alleviate any chance of future problems.
Mr. Al Sarnessian, representing Arbella, noted that the most recent violations are of a serious nature. He cited the case of an apparent insured, Expert Limousine, in which the agent attempted to settle a claim on his own on behalf of Arbella. An application was never received nor a claim reported directly to the company. The Arbella Claims department became aware of the matter as a result of the third party involved, not the agent. Mr. Sarnessian expressed his concern that there may be other similar situations present in the agency of which the company is unaware. Mr. Sarnessian further noted that it was his understanding that the agency and insured had attempted to collect third party claim benefits from the other carrier as well.
Mr. Gutro said an application was completed for Expert Limousine and the insured gave a down payment. He indicated he has not been able to find a copy of the application as yet to verify one was completed and sent to Arbella. He attempted to settle the claim in an expeditious manner as he was aware that the accident had occurred shortly after binding coverage and wished to retain the customer on friendly terms while the policy and claim with Arbella was being processed. He attributed part of the disorganizational problems on the agency's Personal Lines Manager. This position has since been eliminated, which he indicated was part of the efforts to maintain tighter controls at the agency.
Mr. McGowan voiced his disturbance with the fact that the agent paid the damages resulting from the claim which is a direct violation of CAR Rules.
Mr. Peters made a motion to delay action for 60 days to give Arbella the opportunity to audit the agency. The motion was seconded by Mr. Gilman.
Mr. Sarnessian expressed concern with the agent's reaction in paying the claim rather than pursuing same with the company and if the agent ever had an original intent of submitting the application.
Mr. Gutro stated his intent was to advance the claim money to the insured, locate a M.R.
95.3 P. COHEN INS. AGENCY/ARBELLA MUTUAL INSURANCE CO.(cont.)
copy of the application, and then contact the company. He indicated he had no desire to perform payment of claims, but felt it should be handled in the most expeditious way. At this point, the application has still not been found and he has asked the insured for a copy.
Following discussion, Mr. Xifaras motioned to amend the motion to delay action for 30 days and Mr. Gilman seconded this motion.
The Committee voted on the amendment with a vote of 13-1 with Mr. McGowan opposed.
Voting on the amended motion, the Committee's vote carried 11-3 with the Messrs. Silva, Sirois, and McGowan opposed.
Mr. Maher clarified that Arbella and the agency are to report back to the Market Review Committee after 30 days with their audit results and the item will be put on the Market Review Committee agenda at that time. In the meantime, the termination of December 1, 1995 remains unchanged.
M.R.
95.4 G & G INSURANCE AGENCY/COMMERCE INSURANCE COMPANY
Attorney Susan Underwood, representing the Commerce Insurance Company, requested a hearing to petition for a waiver of the 65 day requirement for cession flat cancellation as provided in CAR's Manual of Administrative Procedures, relating to the non-payment cancellation of 370 policies issued due to registrations fraudulently stamped by an employee of the G & G Insurance Agency. Commerce is seeking waiver of the procedural requirement in an effort to reduce premium losses relating to the policy cancellations.
Mr. Peter Dignan recused himself due to the agency being appointed to the Commerce Insurance Company.
Ms. Underwood stated that policies were issued on the fraudulently stamped registrations on advice from counsel. Premium payments were received on three policies and the others were cancelled for non-payment. Twenty-two claims were reported for the policies issued. The amount assessed by CAR for the policies issued is in excess of $200,000. Ms. Underwood contends that Mr. Gajewski is responsible for the monies owed to CAR but that Commerce feels it unlikely that the company will be reimbursed by the party. Therefore, Commerce is proposing , in an attempt to resolve the matter in an equitable manner, to allow flat cancellation of the policies which would result in less than $12,000 being owed. In addition, Ms. Underwood requested the condition be made that if any additional claims should be made, policy cession would be reinstated, though it is unlikely more claims would follow due to the length of time that has passed. She also stated the urgency of settling the M.R.
95.4 G & G INSURANCE AGENCY/COMMERCE INSURANCE CO.(cont.)
matter as the agency appears to be Mr. Gajewski's only asset, and as policies are being non-renewed due to the termination of the agency, the amount of likely recovery is being steadily reduced.
Mr. McGowan made a motion to grant the waiver which was seconded by Mr. Silva.
Mr. Gilman questioned if the matter was properly before the Market Review Committee or if it was more appropriate for the Operations Committee.
Mr. Gilman then offered a substitute motion to refer the appeal to the Operations Committee. This was seconded by Mr. Xifaras.
Mr. McGowan inquired as a point of information whether the Rules precluded the Market Review Committee from ruling on the matter
Mr. Maher indicated they did not, but there was a matter of precedent insofar as the Operations Committee deals with cession and cancellation issues. He advised that the Market Review Committee could refer with recommendations if it so chose. Further, he noted that Servicing Carriers are required to take appropriate steps such as those that have been identified to mitigate losses before any request for reimbursement would be granted.
The substitute motion carried 9-4 with the Messrs. Petty, McGowan, Silva, and Peters opposed.
There being no other business, Mr. McGowan made a motion to adjourn.
The motion carried on a unanimous vote.
The meeting adjourned at 2:15 P.M.
KATHERINE A. DILLON
Representative Producer
Servicing Carrier Liaison
Boston, September 22, 1995
Note: These records have not been approved. These will be considered for approval at the next meeting of the Market Review Committee.