February 26, 2004
FOR IMMEDIATE RELEASE
CONTACT: Chris Goetcheus
Division of Insurance Informs Cape Cod Homeowners of
Andover Group Non-Renewals
Massachusetts FAIR Plan Can Cover Those Impacted
(Boston, MA) The Division of Insurance has been informed that the Andover Group insurers, Cambridge Mutual Fire and Merrimack Mutual Fire, will next month start notifying homeowner insurance policyholders on Cape Cod of non-renewals beginning in May. These insurers, covering about 14,000 homes, estimate that approximately 1,200 non-renewal notices will go out each month to agents and their policyholders.
"We want impacted homeowners to know that coverage is available to them from the FAIR Plan and at rates that are quite competitive with those they have been receiving," said Commissioner Julie M. Bowler.
Since the fall of 2003, the Division of Insurance has been meeting with Cape Cod agents, insurers and the Massachusetts FAIR Plan regarding declining availability in Cape Cod's voluntary homeowner insurance market, a phenomenon largely the result of escalating reinsurance costs to insurers.
The voluntary market for homeowners and commercial property insurance on the Cape and Islands and in other Eastern coastal regions has constricted in recent years. New storm models predict substantially greater potential costs if a "storm of the century" were to strike Massachusetts coastal areas. These models are being used by financial rating agencies to estimate adequate surplus levels that insurers need to maintain. This has caused insurers to purchase greater amounts of reinsurance to protect against increased risk of catastrophic losses.
While the FAIR Plan is a viable short-term solution to the coastal coverage issue, the Division's working group will continue to meet with agent and insurer representatives to evaluate options for minimizing the impact of reinsurance demands in order to increase voluntary coverage on the Cape and Islands.
What Consumers Need to Know:
"Impacted policyholders should contact their agents to facilitate a smooth and timely transition to a FAIR Plan policy," said John Golembeski, President of the Massachusetts Property Insurance Underwriting Association.