Massachusetts Attorney General Martha Coakley’s office has filed its final brief recommending that Insurance Commissioner Nonnie Burnes reject the FAIR Plan’s latest proposed homeowners insurance rate hikes.
The FAIR Plan, a state-created provider of last resort for homeowners coverage, has requested a 25 percent rate hike for the coastal communities of Cape Cod, New Bedford and Fall River, and an average overall 13.6 percent increase throughout the state.
The FAIR Plan insures more than 150,000 coastal and urban homeowners.
The attorney general’s office lost its court apeal of a 2006 decision granting the FAIR Plan a 12.4 percent statewide hike and 25 percent on the Cape effective Oct. 1, 2006. The attorney general had contended that the rates in the 2006 filing approved by the commissioner exceeded a cap on rate increases set by statute.
In the fight against the latest rate filing, the attorney general accuses the FAIR Plan of using an inappropriate hurricane model, inflating its projected hurricane losses, and overcharging its consumers for reinsurance.
“The FAIR Plan was created to ensure affordable homeowners insurance remains available in areas where the private market has temporarily failed to do so. Many FAIR Plan customers are on a fixed income and cannot afford the proposed drastic annual increases to their homeowner insurance policies,” said Coakley. “Furthermore, the proposed rates are not supported by credible evidence of risk, and seek instead to take advantage of market disruption in areas such as coastal Massachusetts to seek inflated rates. We urge the Commissioner to disapprove this rate filing.”
The FAIR Plan is also known as the Massachusetts Property Insurance Underwriting Association (MPIUA).
Source: Mass. Attorney General’s Office
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