For Immediate Release - August 11, 2006

Fair Plan Rates Announced

Fair Plan Rates Announced

Massachusetts Insurance Commissioner Julianne M. Bowler today approved the 12.4% rate increase that was resubmitted by the Massachusetts Property Insurance Underwriting Association (the FAIR Plan). In response to the Commissioner's decision of June 30, 2006, the resubmitted filing included the cost of purchased reinsurance and eliminated certain nonmodeled losses that were determined to be outside the range of reasonableness. The FAIR Plan is the residual market for property owners who are unable to purchase insurance in the voluntary market. Currently, the FAIR plan insures approximately [25%] of all property owners in Massachusetts.

This rate decision is the first since the Massachusetts Legislature amended the FAIR Plan statute in 2004 to eliminate the historic rate caps for the 13 largest share territories by allowing predicted hurricane losses and the cost of reinsurance to be factored into the rate. These largest share territories include the Cape and Islands, New Bedford and Fall River. Increases and new rates for each region are detailed in the attached spreadsheet.

Background:

The FAIR plan was established in the late 1960s to provide property and homeowners insurance in urban areas where companies refused to do business because of civil unrest. As private insurers have withdrawn from our coast, the FAIR Plan has grown into the principal insurance carrier for the Southeastern Coastal region, especially Cape Cod and the Islands, by default. Many of these companies have cited large predicted hurricane losses and high costs of reinsurance as the reasons for their departure.

To read the FAIR Plan decision please go to: www.mass.gov/ocabr/fair-plan-rate-decision-announced.html

Territorial Comparison of MPIUA Homeowners Premiums*

TerritoryCurrent PremiumRevised PremiumRate Change
02-Boston District A1,0611,1023.9%
03-Boston District B1,1801,1951.3%
04-Boston District C1,2661,3415.9%
05-Suffolk Remainder1,2051,2765.9%
11-Rest of Boston8919435.9%
12-Brookline1,3091,3855.9%
30-Quincy9059555.6%
31-Norfolk Remainder8991,03815.5%
32-Fall River8929769.5%
33-New Bedford8341,00220.0%
34-Bristol Remainder1,1561,38720.0%
35-Brockton1,1961,2675.9%
36-Plymouth Remainder9511,14120.0%
37-Barnstable,Dukes, Nantucket8951,11725.0%
38-Lawrence1,0001,0192.0%
39-Lynn9309865.9%
40-Essex Remainder9611,0468.9%
41-Cambridge & Somerville7227220.0%
42-Lowell9309845.9%
43-Newton9499884.2%
44-Middlesex Remainder8768911.6%
45-Worcester City9409400.0%
46-Worcester Remainder9239988.1%
47-Springfield1,1291,1965.9%
48-Chicopee & Holyoke9369360.0%
49-Hampden & Hampshire Remainder8469057.0%
50-Franklin & Berkshire8559217.6%