NU Online News Service, Jan 7, 11:48 a.m. EST
Massachusetts Attorney General Martha Coakley's Office has reached an agreement with the state's residual market property insurance pool to roll back rates .72 percent, it was announced.
Instead of the 2.2 percent rate increase requested by the Massachusetts Property Insurance Underwriters Association, also known as the FAIR Plan (Fair Access to Insurance Requirements), Massachusetts homeowners will save over $7 million, Ms. Coakley's office said.
According to its statement, the homeowners insured by FAIR will see the .72 percent reduction. On average, statewide, some areas will see a 5 percent increase.
The rate agreement was filed yesterday at the Division of Insurance.
"We believe this settlement protects consumers from the unwarranted rate increases sought by the industry," said Ms. Coakley. "In these tough economic times, it's important that consumers not be overcharged for insurance."
The FAIR Plan, which is made up of the state's insurance companies, is designed to provide homeowner insurance to consumers who could not otherwise obtain it in the private market at reasonable rates. The plan covers over 150,000 urban and coastal homeowners.
A request for a rate hike was made to the Insurance Division Oct. 30, 2009. FAIR's proposal included 10 percent rate increases for New Bedford, Lawrence, Lowell, Newton, Springfield, Chicopee, Holyoke, parts of Worcester and Bristol County.
The industry also sought a 2.4 percent increase in rates for more than 70,000 Cape Cod and other coastal homeowners. Ms. Coakley's office said insurers did recognize a need for rate decreases for the city of Boston, and dropped rates between 3 to 10 percent in these areas.
Ms. Coakley's office said it was able to block proposed rate increases for Cape Cod, Fall River, Lynn, Cambridge, Somerville, Hampshire, Newton, Franklin, Berkshire, Chicopee, and Holyoke.
In New Bedford, Lawrence, Lowell, Springfield and Worcester rate increases will be 5 percent instead of the 10 percent that the FAIR Plan was seeking.
The Fair Plan must seek approval of any rate increase from the Commissioner of Insurance. The Attorney General's Office testified on Dec. 15, 2009 that given the current economy, many policyholders would not be able to pay increased premiums sought by the industry and that premiums have been increasing steadily over the past 10 years.
In 2007, the Attorney General's Office noted, it had successfully challenged the FAIR Plan request for an overall rate increase of 13.6 percent, with a 25 percent increase for policies covering property in Cape Cod, New Bedford and Fall River. In 2006, the state insurance commissioner approved a rate hike that allowed homeowners' rates in the Cape and Islands to increase 25 percent.
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