Mass. Nixes 13% FAIR Plan Rate Hike

Massachusetts insurance officials have blocked a 13.2 percent statewide rate hike by the state’s residual market home insurer.

The decision by Insurance Commissioner Nonnie S. Burnes spares some 150,000 coastal and urban homeowners from being charged higher premiums for now. Under the rate proposal that was rejected, premiums for many coastal homeowners would have gone up 25 percent.

The decision Burnes ruled that the FAIR Plan, also known as the Massachusetts Property Insurance Underwriting Association (MPIUA), failed to justify what would have been its first rate hike since 2006, when a 12.4 percent statewide hike was approved.

The rate case had been pending before the Division of Insurance since March 2007. Insurers had to go to court in 2006 to preserve the last rate hike.

Massachusetts Attorney General Martha Coakley was among those who had urged Burnes to reject the FAIR Plan’s proposed hikes. Coakley in fact called for rates to be cut 18 percent statewide, including 29 percent on Cape Cod and surrounding islands.

The FAIR Plan provides basic property insurance those unable to buy it through the voluntary insurance market.

But due to hurricane loss projections and cutbacks on the coast by insurers, it has become a primary market with preferred rates for many agents and homeowners, particularly those along the coast. The FAIR Plan currently provides insurance on more than 40 percent of the residences on the Cape and the Islands.