Senator Dan Wolf
Massachusetts Cape & Islands District
Senator Wolf Calls for Transparency and Rate Reduction for Cape and Islands Homeowners' Insurance

Cape and Islands Senator Dan Wolf (D-Harwich) today urged Massachusetts Commissioner of Insurance Joseph Murphy to deny a homeowners' insurance rate hike proposed by the Massachusetts Property Insurance Underwriters Association, often referred to as the FAIR Plan and last resort for homeowners not covered in the private insurance market.
 
"The proposed changes would raise rates for my constituents by more than 6 percent this coming year," noted Wolf in written testimony, supporting oral testimony delivered at a hearing earlier this month. "This would be in addition to an almost 25 percent rate increase in 2006. If approved, rates on the Cape and Island will have risen almost 44 percent in 10 years."
 
Instead, added Wolf, there are strong indications that a rate reduction, not hike, is justified at this time.
 
Wolf pointed to a lack of transparency regarding how insurance rates are created as a key problem. In addition, argued Wolf, actual risk to Cape and Islands homes is not being properly evaluated, and re-insurance, a process in which insurance companies manage their risk and pass those costs onto consumers, appears to be driving rates much higher than necessary.
 
“Over the years, my district has had a relatively low amount of claims paid out but consistently high premiums,” he continued. “Now the private insurance market has started writing policies in my district again, suggesting that there is potential for significant profits to be made, below current FAIR Plan prices.”
 
Nearly half of all homeowners on the Cape and Islands insure through the FAIR Plan, by far the largest market for the Plan in the Commonwealth. The Division of Insurance must annually approve all FAIR Plan rates, which vary from region to region. No decision on the latest proposal is expected for at least a month.
 
The full text of the Senator’s written testimony is attached.