Massachusetts Agents Cite Crisis in Homeowners Market on Cape Cod

February 24, 2004

The lack of availability of insurance for properties in Cape Cod coastal communities and in some Massachusetts urban areas has reached “crisis” proportion in the opinion of the state’s insurance agents, who are calling on lawmakers to increase the offerings of the state’s FAIR Plan to ease the crisis.

The matter has been exacerbated by the recent decision of a key insurer, The Andover Companies, to cease writing homeowners on Cape Cod, according to Frank Mancini, executive vice president, Massachusetts Association of Insurance Agents.

“Over the last two years, we have seen a severe restriction in voluntary writings by insurance companies for both homeowners insurance and commercial property in the large urban areas, and particularly along the coastal areas of the Commonwealth. For all intents and purposes, the voluntary homeowners and commercial property insurance markets are non-existent in those two areas,” MAIA said in a bulletin to members.

Agents were jolted by the announcement last week by The Andover Companies that it would no longer write homeowners business in Barnstable County on the Cape, and as of May 1, 2004, that the company will begin non-renewing 14,000 homeowners policies in the county. The only available market for these policyholders will be the Massachusetts Property Insurance Underwriting Association, commonly referred to as the FAIR Plan, the residual market for homeowners insurance.

But that is not a solution, Mancini says, because the types of coverages currently available from the FAIR Plan are very limited. “Many policyholders will not be able to purchase the same coverage that they currently have through the FAIR Plan because the plan is unable to offer such coverage as a DP-2, DP-3 or personal liability coverage,” he explained.

MAIA is urging passage of legislation (H 1880) now before the insurance committee that would expand the coverages available in the FAIR Plan to include DP-2, DP-3 and personal liability coverages.

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