Mass. insurance regulators reject FAIR rate hike - The Boston Globe
Massachusetts insurance regulators Friday rejected a request by FAIR Plan, the state's home insurer of last resort, to raise its rates an average of 7.2 percent statewide.
The FAIR Plan, officially called the Massachusetts Property Insurance Underwriters Association, had proposed raising home and condo insurance rates by 6.7 percent on the Cape and the Islands and 9.9 percent in several other areas, including New Bedford, Worcester, and Springfield.
The plan, the state's largest provider of home insurance, currently covers 201,150 householders who are unable to obtain coverage from other insurers, often because they are in high-crime neighborhoods or thought to be at high risk of hurricanes or other disasters. The state has nearly 2 million home insurance policyholders.
State insurance regulators ruled that the FAIR Plan did not offer enough evidence to justify the rate increase.
"If you want to raise rates on Massachusetts consumers,'' Insurance Commissioner Joseph G. Murphy said in a statement, "you had better do your homework and be prepared to justify the increase that you are seeking.''
Robert Tommasino, general counsel for the FAIR plan, recently said the group applied for higher rates because it had not received an increase in six years and new hurricane models show that the state is more vulnerable to damage. The FAIR Plan could file a new application for a rate increase or challenge the ruling before the Supreme Judicial Court.
Tommasino could not be reached Friday.
Attorney General Martha Coakley, who is charged with representing ratepayers, opposed the increase, saying the FAIR Plan was already earning more than enough money to cover its costs. It earned $200 million from 2007 through 2011.
In a statement, Coakley said she was pleased the Division of Insurance recognized that insurers used questionable hurricane models to push for higher rates.
"Consumers in the FAIR Plan have nowhere else to go and should not be required to pay unjustified rates,'' Coakley said. "The rejection of this proposal will save thousands of Massachusetts residents hundreds of dollars and provide them with solid, more affordable insurance.''
Meanwhile, some private insurers are planning even steeper increases in home insurance this year, citing the surge in damage claims resulting from tornadoes, brutal snowstorms, and Tropical Storm Irene last year.
Bunker Hill Insurance in Boston, for instance, previously said it plans to raise rates by nearly 12 percent this year, while The Andover Cos. plans to raise rates by an average of 9 percent.
In an interview, Murphy said he couldn't think of a case where the state rejected a rate increase by another home insurer or forced the company to go through a formal hearing - something required for the FAIR Plan rate requests. "It's a different market,'' Murphy said.
Try BostonGlobe.com today and get two weeks FREE. Todd Wallack can be reached at twallack@globe.com.12 May, 2012
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Source: http://www.bostonglobe.com/business/2012/05/11/mass-insurance-regulators-reject-fair-plan-rate-hike-proposal/OmSs37BgzNyvZBS8qPkwOL/story.html
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