MASS. HIGH RISK HIGH JINX:

Most agents sporting a 149 percent loss ratio or even worse, a 300 percent loss ratio, would expect to be looking for a job in another line of work. Not so in the world of Massachusetts auto insurance. Hanover Insurance Co. has been counter sued for $44 million by one of its high risk agencies, Rapo-Jepsen, for allegedly trying to entice the agent into closing up six of its seven shops or selling its worst policies to an agency of another insurer for $6.6 million. When those talks fell apart, Rapo says Hanover began to harass the agency, causing it to lose business. Hanover does not deny that it attempted to work out a “relatively modest” deal with owner John Rapo to improve on his 149 percent loss ratio. Hanover says the $6.6 million Rapo would normally earn in commissions on his business over three years would essentially be guaranteed if he cooperated with steps to reduce losses. But the Worcester-based insurer says it called off the deal when it learned that Rapo intended to sell out to another agency. “We were absolutely, wholly unaware” that Rapo planned such a sale, according to Hanover’s Mike Buckley. Rapo maintains Hanover officials knew very well the agency sale was part of the plan. Selling undesirable policies to another agency is a tactic Hanover is sensitive about since that’s how it says it ended up in trouble with Rapo-Jepsen. Several months ago, Hanover filed a $20 million suit against Arbella Mutual Insurance Co., Rapo-Jepsen and others for an alleged scheme under which Arbella is said to have put up $1.4 million to induce some of its highest loss ratio agents to sell out to Rapo, thereby forcing the business onto Hanover. Hanover says it loses about $8 million a year on these risks. Meanwhile, last week Arbella was back at the state’s high risk auto facility trying to rid itself of an agency with a 300 percent loss ratio. Arbella has accused Coverall Insurance Agency of Boston of fraud, claiming it allowed applicants with false identities to obtain policies in order to stage accidents. The agency owner, Gerald A. Hartstone, has denied the charges.