Newest Extension Preserves Group Reductions
On December 31, 2024, Governor Maura Healey signed Chapter 286 of the Acts of 2024, extending the waiver of the statutory 35% membership requirement for Massachusetts group auto and householders insurance coverage advertising plans by means of 2030. Chapter 286 had an emergency preamble making the legislation efficient instantly as a substitute of in ninety days. This new statute amends Chapter 147 of the Acts of 2019, which had beforehand prolonged the waiver by means of December 31, 2024.
Historic Context of the 35% Requirement
The 35% participation threshold for group plans derives from M.G.L. c. 175, § 193R(7). Beneath the legislation:
“(7) that such employer, commerce union affiliation or group shall encompass at least twenty-five members, at the least fifteen of whom are residents of the Commonwealth, and that at the least thirty-five p.c are insured inside two years of the efficient date of the plan, such proportion to proceed so insured always thereafter.” (Emphasis added)
This requirement was launched in 1973 to encourage decrease premiums through group advertising plans, whereas making certain that solely “bona fide” teams certified—again then Massachusetts adopted a “Repair and Set up” score system wherein the Insurance coverage Commissioner set uniform premiums yearly.
Progress and Participation Challenges
The Massachusetts group advertising panorama expanded within the mid-Nineties when the American Car Affiliation (AAA) started providing group reductions by means of Commerce Insurance coverage. The newest obtainable info reveals that by 2016, the variety of authorised group advertising plans had grown to about 5,500 statewide. Regardless of this development, Division of Insurance coverage information from that interval confirmed that:
- Solely 5% of two,000 householders insurance coverage group advertising plans met the 35% participation threshold.
- Solely 11% of three,500 auto insurance coverage group advertising plans glad the requirement.
For particulars on these statistics, see Company Checklists’ article of January 5, 2016. “5500 Low cost Teams Keep away from 35% Minimal With Final-Minute Regulation Change.”
Power Structural Points
These power participation shortfalls spotlight what number of teams wrestle to keep up the 35% threshold—regardless of providing reductions starting from 1% to twenty%, relying on market situations. Over the previous three a long time, the Legislature has repeatedly waived the strict enforcement of this statutory requirement, preserving reductions for tons of of 1000’s of insureds who would possibly in any other case lose entry to group-based financial savings.
Trying Ahead
With the waiver now prolonged by means of 2030, lawmakers have once more postponed a definitive decision. Observers would possibly marvel if the statutory 35% requirement needs to be abolished, on condition that waivers have, as a sensible matter, grow to be the norm. This strategy balances preserving group reductions in opposition to strictly imposing participation targets that many plans have traditionally failed to satisfy. Whether or not the rule might be repealed or prolonged past 2030 stays an open query. Nonetheless, for now, group advertising plans in Massachusetts can proceed working with the information that the brink requirement has been relaxed.
