The Massachusetts Division of Insurance has released its rulesfor a new auto residual market mechanism.

The assigned risk plan, known as the Massachusetts AutomobileInsurance Plan, replaces the current system that has been underattack by the insurance industry for decades.

Commissioner Julie Bowler said in a statement that with thehighest losses for the state associated with high-risk drivers,reform is long overdue.

Under an assigned risk plan, individual drivers who cannotobtain insurance coverage in the voluntary market are assigned toinsurance companies based on those companies' market shares.

"Companies will now be responsible for all their policies,forcing responsible management of losses and a greater incentive tofight fraud in the marketplace, which means lower rates fordrivers," she said.

Currently, insurance agencies rather than individual drivers areassigned to insurance companies. Those companies are required toaccept all business presented by the involuntarily assignedagencies, regardless of the volume of business or the amount oflosses they produce.

Frank O'Brien, regional manager for the Property CasualtyInsurers Association of American, said the new plan was a goodfirst step for an insurance market in need of overhaul. "TheMassachusetts auto insurance market is collapsing, and CommissionerBowler's rules are a necessary and a good first step on the road torestoring stability to the market and in attracting new companieswith needed additional capital to the insurance business here," hesaid in a statement.

John Murphy, American Association vice president, said the planbrings Massachusetts into alignment with 43 states.

The law will go into effect April 1 for newly licensed driversor those coming in from out of state. It will expand in incrementsover a three-year period.

Two insurance companies serving the state along with consumergroups have opposed the plan and will urge the incoming Democraticadministration of Gov.-elect Deval Patrick to slow theimplementation.

Stephen D'Amato, a consultant to the Cambridge-based Center forInsurance Research, said the new assigned risk plan will not workwith the current "fix and establish" system, in which thedepartment mandates the auto rates each year.

He told the NU Online News Service that eventually the newgovernor will have to look into delaying implementation to studythe consequences of the program.

"And I think it is most important that any decisions about whoto put in the assigned risk plan be made on driving record only,and not on other factors based primarily on income," he said.