Safety Motorcycle Rate Settlement With Massachusetts Affects Profitable 4Q

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March 11, 2010 Thursday 12:04 PM EST

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Safety Motorcycle Rate Settlement With Massachusetts Affects Profitable 4Q

Chad Hemenway

BOSTON

Safety Insurance Group Inc. said an agreement it made with the Massachusetts Attorney General to change how the company calculated motorcycle insurance rates impacted its fourth-quarter net income by $3.8 million and nearly $5 million for 2009.

Net income fell to $10.3 million from $11.9 million. Net income for 2009 dropped to $54.2 million from $70.3 million in 2008.

Safety Insurance Group is the second-largest insurer of private passenger automobile insurance in Massachusetts, according to BestLink, which provides online access to A.M. Best's Global Insurance & Banking Database. The group does nearly all of its business in Massachusetts, also providing commercial auto, homeowners, dwelling fire, personal umbrella, business owners, commercial package and commercial umbrella policies.

Early this year, Attorney General Martha Coakley said Safety was one of three insurers to come to an agreement about the way rates were set for motorcycle insurance (BestWire, Jan. 15, 2010). Coakley said overcharges occurred when there were discrepancies in the book values of motorcycles. Later, four more insurers reached similar agreements (BestWire, March 3, 2010). In total, all insurers are to pay about $20 million to policyholders and $1 million to the state, Coakley said. Safety is to return about $7.2 million to policyholders.

In April 2008, Massachusetts switched from a rate system in which the state set rates to a "managed competition" system. As a result, Safety Insurance said, in a statement on results, it experienced a 4.5% decrease in average written premiums per exposure for personal auto in 2009, due to rate decreases of 6.7% filed under the new system.

Safety Group currently has a Best's Financial Strength Rating of A (Excellent).

The top five writers of private passenger auto insurance in Massachusetts last year, according to BestLink, were: Commerce Group, with a 31% market share; Safety Group, with 11.1%; Arbella Insurance Group, with 9.3%; Liberty Mutual Insurance Co., with 8.5%; and MetLife Auto & Home Group, with 6.5%.

(By Chad Hemenway, associate editor, BestWeek: [email protected])

March 12, 2010

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