The Massachusetts FAIR Plan has requested a 25 percent homeowners insurance rate increase for Cape Cod residents, part of an overall statewide filing seeking a 13.6 percent average rate increase statewide.
The FAIR Plan, which provides coverage to homeowners unable to secure insurance in the private market, currently insures more than 130,000 homeowners statewide, including a third of all homeowners on Cape Cod.
The new rate bid includes requests to raise both Plymouth and New Bedford rates by 25 percent and Fall River rates by 8.3 percent.
Massachusetts Attorney General Martha Coakley expressed concern regarding the 25 percent rate increase for Cape Cod, which if approved would be the second year in a row rates have risen on these coastal properties by 25 percent.
Coakley’s office is still pursuing an appeal of last year’s decision, begun by her predecessor Tom Reilly, which granted the FAIR plan a 12.4 percent statewide hike and 25 percent on the Cape.
Last October’s rate hike rate was the first since the Massachusetts Legislature amended the FAIR Plan statute in 2004 to eliminate rate caps for the 13 largest share territories by allowing predicted hurricane losses and the cost of reinsurance to be factored into the rate.
This latest proposed overall rate requests are 13.2 percent for Homeowners Multi-Peril Insurance and 8 percent for Dwelling Fire and Extended Coverage. There is no increase requested for Commercial Fire and Allied Lines. The proposed effective date for the new rates is July 1, 2007.
The FAIR Plan says rate hikes are needed to keep up with large predicted hurricane losses and the high costs of reinsurance.
But Coakley says she’s worried about the impact on homeowners.
“It is important that all homeowners in Massachusetts have access to insurance that will provide adequate coverage in the event of a natural disaster or other disaster,” said Coakley. “FAIR Plan’s proposed increases would place an unreasonable burden on consumers. My office is committed to carefully reviewing this rate filing and advocating for consumers against any unjustified increases by the industry.”
The Division of Insurance will hold a hearing at 10:00 a.m. on April 27, 2007, at the offices of the Division of Insurance, 5th Floor, One South Station, Boston, to consider the FAIR Plan filing.
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