Commerce Letter to Agents

Date: November 20, 2007
Re: Personal Automobile Rate Decrease

Yesterday, Commerce filed proposed rate decreases and additional coverages for personal automobile insurance policies. The new rates and coverages are expected to take effect April 1, 2008, if approved by the Commissioner of Insurance.

As we prepared our filing, we maintained the following objectives:

• Deliver a competitive product and price to agents that would position Commerce aggressively in the marketplace

• Strike a balance between protecting renewal business and creating a compelling new business rate

• Create a rating structure that would be easy for agents to use and understand

• Construct a rating methodology that more closely aligns loss costs with risk profile

• Maintain our industry leading compensation programs Based on these objectives, we are pleased to introduce a filing where we anticipate that approximately 75% of your insureds will experience a decrease in premium. In fact, nearly 35% of your customers will see decreases in excess of 10%. As you might have anticipated, experienced operators, and those with SDIP points of 99 or 98, will reap the most cost savings.

We have also proposed several policyholder discounts which offer your customers additional benefits, including:

• Enhanced pricing for experienced drivers

• A sliding scale of “Loyalty Credits” of up to 4% for existing customers who have maintained continuous coverage for three or more consecutive years

• A 5% Account Discount when Commerce, or the FAIR Plan, writes a property policy for the named insured