Martha Coakley (D)
BOSTON (Legal Newsline) - Rates for Massachusetts homeowners obtaining insurance from the residual market will be lowered by a .72 percent average statewide, following a settlement announced by Attorney General Martha Coakley.
The settlement, entered into with the Massachusetts Property Insurance Underwriters Association, also known as the FAIR Plan, will save Massachusetts homeowners more than $7 million compared to the rates sought by insurance companies. The FAIR Plan had recently proposed a 2.2 percent increase to homeowners insurance rages.
"We believe this settlement protects consumers from the unwarranted rate increases sought by the industry," Coakley said. "In these tough economic times, it's important that consumers not be overcharged for insurance."
The FAIR Plan is comprised of the state's insurance companies and is designed to provide reasonable homeowner insurance to consumers who could not otherwise obtain it. More than 150,000 urban and coastal homeowners are covered by the plan.
Ten percent rate increases were proposed for New Bedford, Lawrence, Lowell, Newton, Springfield, Chicopee, Holyoke, parts of Worcester and Bristol County in a proposal submitted by the FAIR Plan to the Division of Insurance on October 30. An additional 2.4 percent increase was also sought for over 70,000 Cape Cod and other coastal homeowners. Rates were dropped for the city of Boston from between three to 10 percent.
The rate increases for Cape Cod, Fall River, Lynn, Cambridge, Somerville, Hampshire, Newton, Franklin, Berkshire, Chicopee, and Holyoke were successfully blocked by Coakley's office and, under the new settlement, New Bedford, Lawrence, Lowell, Springfield and Worcester's rate increase will only be five percent instead of the 10 percent sought by the FAIR plan.
Approval must be granted from the Commissioner of Insurance for any rate increase by the FAIR Plan. The attorney general's office testified on December 15 that, in the current economy, many policyholder could not afforded the increased premiums, which have been steadily increasing for the past decade.
The FAIR Plan had previously requested an overall rate increase in 2007 of 13.6 percent with a 25 percent increase for any policy covering property in Cape Cod, New Bedford and Fall River. Coakley office challenged that request and the Commissioner of Insurance subsequently denied the request. The Commissioner did approve a 2006 rate hike allowing rates for homeowners in the Cape and Islands to increase 25 percent.