Massachusetts Insurance Commissioner Nonnie Burnes has scheduled a public hearing for April 27, to consider a rate increase for the Massachusetts Property Insurance Underwriting Association, also known as the FAIR Plan.
The FAIR Plan, which writes property insurance for those who can’t obtain it in the private market, has taken on a leading role in providing coverage on Cape Cod and coastal areas as insurers have sought to limit their exposure in these storm-prone areas. It currently insures more than 130,000 homes statewide, including a third of all homeowners on Cape Cod.
The FAIR Plan has proposed overall average rate increase of 13.2 percent for Homeowners Multi-Peril Insurance and 8 percent for Dwelling Fire and Extended Coverage.
Included in the FAIR Plan’s proposal is a 25 percent rate increase for homeowners on Cape Cod and in Plymouth and New Bedford and 8.3 percent increase for those in another coastal community, Fall River.
It has recommended that rates for Commercial Fire and Allied Lines remain unchanged.
The proposed effective date for each filing is July 1, 2007.
Massachusetts Attorney General Martha Coakley has 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.
The FAIR Plan says rate hikes are needed to keep up with large predicted hurricane losses and the high costs of reinsurance.
The hearing will be at 10:00 a.m. on April 27 at the offices of the Division of Insurance, 5th Floor, One South Station, Boston.
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