A regulator's decision to approve a big premium hike for coastal property owners by Massachusetts' public insurer of last resort has been approved by the state's highest court.

The Monday decision by Massachusetts Supreme Judicial Court was a defeat for State Attorney General Martha Coakley, who had challenged the rates as excessive.

Former State Insurance Commissioner Julianne Bowler in 2006 had approved rate increases of 25 percent on Cape Cod, the nearby islands and in other coastal areas, and 12.4 percent elsewhere for the Massachusetts Property Insurance Underwriting Association (MPIUA), the state's Fair Plan.

The attorney general, who had opposed the rate increases during hearings that proceeded the commissioner's decision, argued that the hikes exceeded legal caps set on such insurance rate increases. But the commissioner pointed to a 2004 amendment to the law directing her to consider predicted hurricane losses and costs of catastrophe reinsurance "notwithstanding" the rate cap.

According to the high court, Ms. Bowler did not err in using the predictions of catastrophe modeling firms, which she found, while not perfectly calibrated, "offered reliable evidence of the range of hurricane losses that might be experience in the state."

About 150,000 MPIUA policyholders have faced higher premiums as a result of the regulator's action. In 2007, on average, increases added $112 to the $900 cost of an annual policy, while policies for waterfront homes rose $450, on average, raising them as high as $2,250.

Ms. Coakley, in a statement, said the court's decision "will make it harder to ensure that consumers get a fair deal from the Fair Plan."

Special Reports /

Mass. High Court Upholds Fair Plan Hikes

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