Just the tip of the iceberg! The Massachusetts FAIR Plan (and are other insurers in the voluntary market) is requiring homeowners to purchase inflated amounts of insurance on their homes. Underwriting guidelines base required amounts of insurance on a dwelling’s Replacement Cost, the current cost to build a structure prior to a loss. The FAIR Plan requires amounts of insurance based on the structure’s Reconstruction Cost, the potential worst case scenario cost to rebuild the structure following a loss. Reconstruction cost is often 30-50% greater than the Replacement Cost and required premiums are increased proportionately.
This practice results in overcharges totaling millions of dollars every year. Why does this practice not get the attention of the Division of Insurance and/or the Attorney General’s office? Seems to me the FAIR Plan should owe policyholders a refund.
Hi Frank, interesting points you brought up. Are you located in Massachusetts? I’d like to speak with you about things pertaining to the industry, most importantly the Fair Plan. I believe if enough individuals in the industry get together and figure out some of MPIUAS Practises we can be better informed and start making some changes. I am in the industry and am impressed with your CPCU designation
Just the tip of the iceberg! The Massachusetts FAIR Plan (and are other insurers in the voluntary market) is requiring homeowners to purchase inflated amounts of insurance on their homes. Underwriting guidelines base required amounts of insurance on a dwelling’s Replacement Cost, the current cost to build a structure prior to a loss. The FAIR Plan requires amounts of insurance based on the structure’s Reconstruction Cost, the potential worst case scenario cost to rebuild the structure following a loss. Reconstruction cost is often 30-50% greater than the Replacement Cost and required premiums are increased proportionately.
This practice results in overcharges totaling millions of dollars every year. Why does this practice not get the attention of the Division of Insurance and/or the Attorney General’s office? Seems to me the FAIR Plan should owe policyholders a refund.
Hi Frank, interesting points you brought up. Are you located in Massachusetts? I’d like to speak with you about things pertaining to the industry, most importantly the Fair Plan. I believe if enough individuals in the industry get together and figure out some of MPIUAS Practises we can be better informed and start making some changes. I am in the industry and am impressed with your CPCU designation
I feel dialogue on this topic is essential for insurance professionals and insurance consumers. My email address is flombard10@gmail.com.