Senate panel will uncover the necessity of homeowners insurance rate hikes
Homeowners insurance premiums are spiking in Massachusetts, and a new Senate panel intends to look into the issue. The Senate’s Post Audit and Oversight Committee will be investigating the Massachusetts Division of Insurance and its approval of costly homeowners insurance rate increases. Senator Michael Barrett will be leading the Senate panel in the investigation. Depending on the findings of the investigation, homeowners in Massachusetts could eventually see some relief to growing homeowners insurance rates.
State regulators approve rate increases from multiple insurers
The Massachusetts Division of Insurance has approved a 9% premium increase from Mapfre USA Corp., the state’s largest homeowners insurance provider. State regulators have also approved rate increase proposals coming from other insurance companies. In the case of Mapfre USA Corp., the rate increase is expected to raise the average homeowners insurance premium to $1,250 a year. This is an average estimation, however, and some homeowners may see more significant increases in their insurance premiums than others.
Natural disasters lead to financial losses for insurers
Many of the insurance companies asking for higher premiums cite natural disasters as the reason that rate hikes are needed. Powerful storms are not uncommon in Massachusetts, but these storms have taken a heavy toll in recent years. As a result of powerful storms, insurers have had to find ways to recover from financial losses. This is typically accomplished through increasing insurance premiums. The problem, however, is that not all rate hikes can be justified by the prevalence of natural disasters, as they may be placing consumers under unnecessary financial strain.
Insurers are trying to keep up with the costs of their reinsurance coverage
Natural disasters are not the only thing placing insurers under greater strain. Companies note that they must also keep up with the cost of reinsurance coverage. Reinsurance costs have been climbing for several years, with insurers in Massachusetts paying a great deal of money to ensure that their reinsurance coverage is maintained. This may not be enough to justify growing homeowners insurance premiums, however, and the Senate panel intends to determine whether premiums must continue growing.