For Immediate Release - May 14, 2012

Division of Insurance Rejects FAIR Plan Rate Increase

FAIR Plan decision eliminates state average increase request of 7.2 percent

BOSTON - May 10, 2012 - Joseph G. Murphy, the Commissioner of the Patrick-Murray Administration's Division of Insurance, today issued an order disapproving the Massachusetts Property Insurance Underwriters Association (“MPIUA”) proposed rate filings for home insurance policies across the state through the FAIR Plan.

The FAIR Plan submitted a filing for a 7.2 percent statewide average rate increase on Nov. 10, 2011 for home, condominium and dwelling fire and extended coverages. This filing proposed a 6.7 percent increase on the Cape and the Islands, and 9.9 percent increases in areas such as New Bedford, Worcester, and Springfield.  

In his order, the Commissioner cited his finding that the MPIUA failed to meet its statutory burden of proof by demonstrating that its filing met the applicable statutory and regulatory standards. The disapproval was requested by the Division of Insurance's State Rating Bureau and the Attorney General's Office. DOI hearing officers approved the request, with the Commissioner making the final decision.

“Whether it’s health insurance, home insurance or any of the lines of insurance we regulate, the Division of Insurance carefully scrutinizes all proposed rate increases as consistent with the laws and regulations of the Commonwealth. Ensuring that insurance rates are commensurate with the benefits provided at the most reasonable cost is the Division’s priority,” Murphy said. “If you want to raise rates on Massachusetts consumers, you had better do your homework and be prepared to justify the increase that you are seeking.”

MPIUA offers home insurance coverage through a program commonly referred to as the FAIR Plan. The FAIR Plan is made up of all of the state's home insurance companies, and is open to consumers who are unable to get insurance through the private market. Currently in Massachusetts, there are about 200,150 policies with the FAIR plan. The FAIR Plan's current rates will remain in place at this point. The FAIR Plan decides to seek a rate change, it will have to submit a new rate filing and start the review process will start at the beginning.

“We want to make sure that the FAIR plan provides value for the residents of Massachusetts who have no choice but to seek coverage under this program,” said Barbara Anthony, Undersecretary of the Office of Consumer Affairs and Business Regulation. “This filing did not meet the standards that the Division of Insurance expects. I’m gratified to see that the interest of Massachusetts consumers has been protected.”

The Division of Insurance is an agency within the Office of Consumer Affairs and Business Regulation. Follow the Office at www.mass.gov/consumer, its Consumer Connections Blog and at its Twitter feed, @Mass_Consumer.