The state has shot down the request to hike rates that was made by FAIR for its high risk pool.
Regulators in Massachusetts have turned down a request from the high-risk homeowners insurance provider that would have caused premiums for that coverage to rise by an average of 7 percent.
The FAIR high risk plan wrote a large number of policies in 2012, according to the Division of Insurance.
Though the majority of the areas that have the highest risk of storms and flooding are in the region of Cape Code and the islands, in 2012, the FAIR high risk homeowners insurance plan wrote 188,000 policies, which included 2,700 in Springfield. This, according to the state Division of Insurance Deputy Commissioner, Kevin Beagan.
Beagan was one of the officials in Massachusetts who announced the homeowners insurance decision.
The FAIR plan (which stands for Fair Access to Insurance Requirements) is run by the Massachusetts Property Insurance Underwriting Association. Any insurer that writes basic property policies within the state must participate in that plan and are required to take on their portion of the losses, equating to their share of the market, explained Beagan.
Of all of the home insurance policies that were written in 2012, those from the FAIR plan made up 12.7 percent of the market. This also made FAIR the largest entity in the insurance-like category within the state, said Beagan. He took great care to show that there is a difference between an insurer, the Underwriting Association, and FAIR, itself.
The undersecretary of consumer affairs and business regulation in the state, Barbara Anthony, said that FAIR’s request to increase its rates did not adequately show that the higher premiums would be needed in order to meet its burden. She explained that “It means that their insurance premiums will not increase,” and that “It’s always a good thing when we can keep insurance premiums stable.”
A similar homeowners insurance increase request by FAIR was also rejected in 2013. That one was also for an average of 7 percent. Following heavy local storm losses in 2011, the majority of insurers had increased their rates by an average of 5 to 7 percent.