Massachusetts launches inquiry into growing homeowners insurance premiums
The Massachusetts Senate will be launching an inquiry into “troubling homeowners insurance rate increases.” Several homeowners in the state have been hit by large increases as insurers sought to recover from financial losses due to heavy snowfall last winter. Last year, record snowfall caused significant damage to property and loss of business, which placed more pressure on insurers who now want to recover from these losses. This is somewhat typical for the insurance industry, especially in the wake of significant natural disasters.
Heavy snowfall has lead many insurers to raise rates
The Senate inquiry will investigate several of the state’s largest insurance companies, including Bunker Hill Insurance, which raised premiums by an average of 7.8%. Senator Michael Barrett, chairman of the Post Audit and Oversight Committee, notes that premiums increases are expected, as insurers must adjust themselves to emerging and changing risks. Some rate increases may be unnecessary, however, especially for insurers that may be taking advantage of heavy snowfall in order to raise premiums by a significant degree.
Inquiry will also examine whether or not regulators properly examined rate increase proposals
The inquiry will examine whether or not large insurance rate increases are necessary. In order for premiums to be increased, insurers must submit proposals for increases to the Massachusetts Division of Insurance. Regulators are responsible for approving or rejecting these proposals, and state legislators want to ensure that the regulatory agency has done what it must to ensure that rate hikes are justifiable.
Ice dams caused an estimated $82 million in damage to properties in many part sof the state
Typically, homeowners insurance rates have grown by 2% to 3% every year. Insurers suggests, however, that the 110.6 inches of snow that the state saw last winter lead to major losses. The majority of these losses were caused by ice dams, which had formed on rooftops, preventing melting snow from draining properly. Safety Insurance estimates that the ice damns caused some $82 million in damage, up from the $20 million in damage they had caused in 2011.