Patrick halts Romney's auto insurance revamp

Governor orders review of system

Governor Deval Patrick yesterday put on hold a major auto insurance initiative of former Governor Mitt Romney and disclosed plans to launch a broad overview of the state's heavily regulated system.

Cyndi Roy, the governor's spokeswoman, said Patrick plans to form a study group next week that will report back within 60 days on what steps the administration should take. She said everything would be on the table.

"It's not narrowly focused," Roy said of the panel's mission. "Ultimately, the governor wants to do what's in the best interest of consumers."

The state's auto insurers have been waging a fierce battle over the industry's regulatory framework for several years, with Romney and most insurers urging less state regulation and more competition and the state's biggest auto insurers pressing for the status quo. The state is the only one in the nation where regulators set auto insurance rates.

At the end of his administration, Romney's insurance commissioner pushed through a sweeping change in the way drivers that no insurer wants to insure are apportioned among companies. Romney saw the creation of a so-called assigned risk plan, where as many as a million drivers would be assigned to carriers, as a preliminary first step toward a competitive rate-setting environment. He was supported by former Attorney General Thomas F. Reilly.

After taking office, Patrick fired Romney's insurance commissioner, Julianne M. Bowler, and yesterday ordered the acting commissioner to put rules implementing Bowler's assigned risk plan on hold for 90 days. The acting commissioner, Joseph G. Murphy, said he was acting under rules that allow a commissioner to put a rule on hold if its application would be "unfair, unreasonable, or inconsistent with public policy." He scheduled a hearing on the matter for Feb. 12.

Patrick said little about auto insurance during his campaign for governor, although he indicated he would be reluctant to blow up the existing system. Employees at Commerce Insurance Co. of Webster, the state's biggest auto insurer and the leading opponent of the Romney administration's proposed changes, were strong financial supporters of Patrick during the campaign.

Roy said no decisions have been made about whether the existing system needs to be changed or how it would be changed. She said the study group would review what other states do and analyze the current system and report back to Patrick within 60 days. She said she did not know who would be heading the study group.

Frank O'Brien, vice president and regional manager for the Property Casualty Insurers Association of America, which supported Romney's efforts to revamp the system, said the delay in implementing the assigned risk plan was "disappointing but not unexpected given the pressures that reform opponents have put on the new administration." He said the assigned risk plan was needed to distribute high-risk drivers among companies more equitably.

"We are hopeful that during this 90-day review period that the Patrick administration will have a desire to become more knowledgeable concerning the insurance crisis in Massachusetts with an eye toward making an informed decision about how to best service the citizens of the Commonwealth," O'Brien said in his statement.

Stephen D'Amato, a consultant to the Center for Insurance Research in Cambridge and a former insurance regulator, said Patrick is doing what many people expected him to do, take a close look at the industry.

"It's a sound policy decision by the governor. He obviously wants his administration to take a serious look at the issue," he said.

Bruce Mohl can be reached at mohl@globe.com.