The Massachusetts FAIR (Fair Access to Insurance Requirements) Plan, the state’s home insurer of last resort, has proposed in April an average statewide rate hike of 6.8 percent.
Testimony from expert witnesses and cross-examinations are expected to be scheduled in coming weeks.
The FAIR Plan, whose official name is Massachusetts Property Insurance Underwriting Association, is a residual market insurance association in which all companies writing basic property insurance in Massachusetts are required to participate with losses shared among the member companies on a premium volume basis.
The FAIR Plan has not had a rate increase for past seven years. It currently underwrites around 200,000 policies — approximately 10 percent of the state’s home insurance policies.
On April 12, the FAIR Plan board submitted its homeowners, dwelling and commercial rate filing with the Massachusetts Division of Insurance, with a proposed effective date of July 1, 2013.
The overall rate change sought for Homeowners 2, 3 and 5 (owners forms) is +7.0 percent, while the rate changes for Homeowners 4 (tenants form) and Homeowners 6 (condominium form) are -5.6 percent and +6.1 percent, respectively, for an overall statewide homeowners rate change of +6.8 percent.
The overall statewide rate changes proposed for dwelling and commercial lines are +5.2 percent and 0.0 percent, respectively.
Communities with higher storm risks could see higher rate hikes, but any rate increases as well as decreases would be capped at 9.9 percent.
Last year, the FAIR Plan’s proposal of a 7.2 percent average rate increase was rejected by state regulators. This time, the insurer plans to bring in more expert witnesses to speak on its behalf. It will also submit many more pages of documents to bolster its case.
There are a number of different components in the rate filing — but the two most controversial components of the rate filings are the inclusion of the cost of reinsurance and the use of new hurricane models that shows Massachusetts at a potentially greater risk of storm damages.
Was this article valuable?
Here are more articles you may enjoy.
The Battle Over J&J’s Bankruptcy Plan to End Talc Lawsuits 
Viewpoint: Deepfake Fraud Is On the Rise. Here’s How Insurers Can Respond 
Global Tech Outage Disrupts Industries, Highlights Online Risks 
Beryl’s Remnants Spawned 4 Indiana Tornadoes, Including an EF-3: NWS From This Issue
