Agents will need time to adjust business

By Jim Kinney

03/26/2008- The Republican

The state's change to a managed competition for auto insurance is forcing agents across the state to do something they haven't had to do in 30 years - work to sell auto insurance.

After all, under the system that's ending this month, the state set the rates for private passenger automobile insurance.

"The state controlled everything. They not only controlled the rates, but they controlled the forms, the safe-driver plans. Everything was the same," said Kevin E. Ross of Ross Insurance. 
 
Beginning April 1, auto insurance providers will be competing for consumers' attention as well as their policies.

Rejean J. Remillard, owner of Rejean J. Remillard Insur-ance Agency of Agawam, said he spent three days training his agents on the new system in which insurance rates will now be based on as many as 15 different criteria. That's up from the five criteria used in the old system.

"No two customers will have the same rate," Remillard said. "We sent a mailing to all of our customers letting them know what we can do for them."

The old system meant a customer had little reason to change insurance companies or even agents, said J. Bruce Cochrane, president and chief executive officer of Renaissance Group Insurance in Wellesley. "Unless that agent or that carrier would really mess up, that customer would renew every single year. You had no pressure on the agent of having business walking out the door."

Ross said his agency, like others across the state, is looking to add more carriers. Customers are sure to shop around on their own if their agent doesn't do it for them, he said.

At Ross Insurance, each of the nearly 20 insurance companies the firm will soon represent is listed across the top of a 2-foot-wide spreadsheet. Every time a company comes out with a new discount, a new program or some sort of bell or whistle in the way it will handle auto insurance in Massachusetts in this new era, that detail gets added to the spreadsheet.

"We unfold it in a war room when we need to talk about it," said Ross, vice president of the company that employs 10 people. "It's the only way we could keep track. These companies are coming up with something new every day."

"It's going to be a nightmare," said Albert J. Adams, a 30-year veteran of the business, who owns his own agency, Al Adams Insurance in Agawam. "It is going to take two years before anybody knows anything."

According to the Massachusetts Association of Insurance Agents, there are 1,600 independent insurance agencies in the state. Frank A. Mancini, president and chief executive officer of the association, estimates that 250 of those agencies are in Berkshire, Franklin, Hampshire and Hampden counties.

While the changes to the auto insurance industry are expected to bring lower rates, they will also introduce differences in policies and variety in discounts. 
 
"Customers won't be able to compare apples to apples anymore," Ross said.

Agents already deal with similar competition in other lines of their business like homeowners or life insurance, so they are prepared in a way to deal with the change, Cochrane said.

Joseph Passy of Aurora Insurance Agency in Springfield, said that while he sells other coverage, "personal auto is the bread and butter" of his business.

It is also how he starts a relationship with most of his customers, Passy said. Most people get car insurance first, he said, before they buy a home and need homeowners or open a business and need coverage for the business.

"Once they get auto coverage from me, they are likely to come back," Passy said.

That's why Adams said he pays attention to every Progressive Insurance advertisement he sees. The company expects to enter the Massachusetts market in May, but won't have agents until 2009. In the meantime, it will sell the coverage on its Web site.

Ross said it is up to agents to stress service. That's the way they will be able to compete with Internet sales sites.

Drivers' records, specifically accidents and moving violations, will go a long way to figuring their new insurance rates, according to Adams. "I think you'll see bad drivers riding around on bicycles because they won't be able to afford the new rates," he said. "Maybe that's the way it should be."

While Ross said he's already fielding inquiries from customers, he said it won't really be an issue for most people until their current yearlong policy expires. Canceling an existing policy early to take advantage of the new rates could mean penalties and may not be worth it, he said.

"I think we are all going to have a steep learning curve," Ross said. "In the first couple of years there will be a lot of unsettled customers because change is unsettling."