Mr. Reardon said the company wants "to focus our efforts on segments and products in which we can be more competitive and successful."

The company said it insures approximately 30,000 private passenger autos in Massachusetts.

"This latest defection from the Massachusetts auto market is a clear call for reform in the Commonwealth," said Gerald L. Zimmerman, assistant general counsel for the Des Plaines, Ill.-based National Association of Independent Insurers

Massachusetts Insurance Commissioner Julie Bowler, in an interview with National Underwriter before the Holyoke/Plymouth agreement was announced, said one of her key goals is to create a stable market for auto insurance in the state.

"In the past four years, Massachusetts has lost six auto carriers," Ms. Bowler pointed out. "There are fewer than 20 insurers writing auto coverage in the state, and five of those have two-thirds of the market."

By comparison, New Jersey, which has frequently been described as the worst auto insurance market in the nation, has 48 carriers that offer auto insurance.

Under the agreement, Holyoke would stop writing Massachusetts private-passenger auto insurance effective Jan. 1, 2004. Plymouth Rock will offer five-year contracts to independent agents that represent Holyoke Mutual for the coverage. The Massachusetts Division of Insurance has approved the plan.

"Almost all of the national writers have left the [Massachusetts] market, and now some of the regional players are starting to leave," Mr. Zimmerman told National Underwriter. "It's just not a profitable market for the carriers, there are too many restrictions on underwriting and rating, and frankly they don't see it improving."

Mr. Zimmerman said pending legislation that would support a reasonable direct repair system would encourage auto insurers to stay in the market.

The bill, S.B. 856, provides that an appraiser is not needed when auto damages do not exceed $2,500. In addition, the bill authorizes insurers and appraisers to provide a list of repair facilities that are able to adequately repair a vehicle within the estimate provided by the insurer or appraiser, he said.