Auto Insurance
Kemper Offers State Auto Plan
The Kemper Insurance Company, faced with $37.1 million in losses this year from its auto insurance policies in Massachusetts, proposed a plan today to take itself out of the state’s troubled auto insurance market by creating a replacement company, to which it would contribute $100 million.
The Kemper Insurance Company, faced with $37.1 million in losses this year from its auto insurance policies in Massachusetts, proposed a plan today to take itself out of the state’s troubled auto insurance market by creating a replacement company, to which it would contribute $100 million.
In announcing the move, Kemper attributed its Massachusetts losses to low insurance rates set by the state, and unusually high accident and auto theft rates. The proposal comes four months after the Fireman’s Fund Insurance Company, then the state’s sixth-largest insurer, announced that it would stop doing business in Massachusetts and agreed to pay the state $45 million to shut down quickly.
Under the Kemper plan, Kemper would establish a nonprofit mutual company called Arbella Mutual Insurance that would take over all 250,000 Kemper policies in the state by June 30. The plan, which is unprecedented in the state, is designed to insulate the national company from its disproportionate losses in Massachusetts. Special Clearance Needed
For the plan to succeed, Kemper would need special clearance, because state law prohibits companies that do not offer auto insurance from selling any other kind of insurance. The company sells most kinds of personal and commercial insurance and is the third-largest writer of auto insurance in Massachusetts.
In 1986, Kemper lost $31.4 million from its auto insurance policies in Massachusetts. At a news conference today, Gerald L. Maatman, president of Kemper’s National Property and Casualty Insurance companies, said that Massachusetts led the country in its auto theft rate and the number of accident claims were twice the national average. ‘’The only state coming anywhere near having Massachusetts’s problem is New Jersey,'’ he added.
Roger Singer, the state’s Insurance Commissioner, said he was studying Kemper’s proposal. He added that ‘’my concern is to make sure consumers are protected and that the market is stabilized.'’ Willing to Modify Plan
More : query.nytimes.com
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