State Curbs Insurance Rate Hike for Cape

State curbs insurance rate hike for Cape
By
Jenifer B. McKim
The Boston Globe

Here is an excellent article by Ms. McKim which is sure to inspire many area residents to heave a great sigh of relief. 10% can be a rather significant amount and is sure to add up. Is this music to our ears? We believe so. The article follows.

— Tom Skelly

Boston residents whose homes are covered through Massachusetts’ insurer of last resort will get a 10 percent rate cut this year, and premiums will remain flat for Cape Cod homeowners who rely on such a policy, known as the FAIR plan.

The state Division of Insurance rejected requests by the Massachusetts Property Insurance Underwriters Association to raise FAIR plan premiums for Cape Cod homeowners by 2.4 percent and by 10 percent for residents of New Bedford, Worcester, and Springfield. Residents of those cities will instead see FAIR premiums rise 5 percent. Overall, premiums will decline an average of 1 percent, compared to the 2 percent average increase sought by the insurance association.

“This is good news for consumers who are feeling the effects of the economy,’’ Joseph Murphy, the state’s acting insurance commissioner, said yesterday. He said some of the rate increases sought by the association “did not appear to be justified.’’

The association attributed the need for higher rates to increased claims from fires and ice storms, among other things. Association officials could not be reached for comment yesterday.

The association operates the FAIR plan, which provides homeowner insurance to consumers who cannot get coverage in the private market because they live in storm- or flood-prone areas, among other issues. FAIR plans were created across the country in the 1960s after private insurance companies fled urban areas beset by civil unrest.

There are 153,675 FAIR policyholders in Massachusetts, most of them on Cape Cod or the southeastern section of the state. The association is made up of companies that offer homeowners coverage on the private market in Massachusetts.

The state’s rate decision is particularly welcome on Cape Cod, where many homeowners have no choice but to buy into the FAIR plan and have seen huge premium increases in prior years.

“We are very pleased,’’ said Paula Aschettino an Eastham homeowner who heads the 6,000-member Citizens for Homeowners Insurance Reform. “This will be a great savings because our rates have been a terrible hardship’’

Aschettino said the average Cape Cod homeowner pays about three times what the owners of similar homes inland pay for insurance coverage. She said the higher rates are based on exaggerated risks of damage from storms and other dangers that insurers used when calculating rates for the Cape.

The new premiums go into effect April 1.

Jenifer B. McKim can be reached at:

jmckim@globe.com.

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http://www.boston.com/business/articles/2010/01/15/state_curbs_insurance_rate_hike_for_cape?mode=PF

Tagged as: Insurance Rate Hike