ANOTHER INSURER LEAVES COAST:

The state’s second largest commercial insurer of coastal properties is dropping coverage to 6,500 policy holders in southeastern Massachusetts and Cape Cod because company reinsurance payments are rising by as much as 20 percent as a result of Gulf Coast hurricane damage. Hingham Mutual Group will not renew affected policies beginning in February, said George Cole, senior vice president. The reinsurance increase would cost the company about $1 million, Cole said. “We simply can’t afford the reinsurance costs. We have seriously reduced our coastal exposure.” Cole said Hingham Mutual decided to drop policies rather than raise rates because the time necessary for obtaining state approval for the increases wouldn’t come in time to offset costs. Insurers have been dropping policies on the Cape and islands over the past several years in response to rising reinsurance costs and new computer models that predict high losses in the event of a serious storm. The Andover Group, the state’s largest home insurer, announced last May it would begin to drop all of its approximately 14,000 policies on the Cape. Although the likelihood of a major hurricane hitting the Northeast is slim, the high value of coastal properties in Massachusetts would cause staggering damages, said state Division of Insurance spokesman Chris Goetcheus. “Home values are so high it makes reinsurers very nervous,” he said. Agents said it’s likely the only viable option for Hingham Mutual customers will be the FAIR Plan. After years of modest increases, the FAIR Plan’s rates are also expected to rise up to 25 percent in the coming year in response to higher costs for reinsurance and storm risks.

Topics Carriers Reinsurance