A request to increase homeowners insurance premiums by 7 percent was rejected by Massachusetts Commissioner of Insurance Joseph Murphy. The move could help residents save approximately $16 million in premiums, according to The Boston Globe.
The plan for the increase was presented by the Massachusetts Property Insurance Underwriting Association, known as Fair Plan, which covers 130,000 homeowners across the state. This is not the first time Fair Plan has tried to increase rates. In 2011, Fair Plan presented the same proposal to the state, which was also rejected by Murphy because it did not provide enough information to enforce the need of premium increases.
Residents who are enrolled with Fair Plan cannot buy standard coverage through the traditional marketplace, so there are a few more rules and parameters the organization must go through to get approved for rate increases. Robert Tommasino, general counsel for Fair Plan, said the organization will submit a similar request next year, but he said the state has high standards for these types of decisions.
The state was a bit worried about the strategies Fair Plan had in place, especially for its projected losses in case hurricanes occurred. The Globe stated that regulators were not confident with the organization's reinsurance costs, as well. Attorney General Martha Coakley said she was happy about the decision and hopes this means residents will have an easier time paying for insurance.
"Homeowners should not be required to pour their money right into the pockets of insurers," Coakley told the Globe. "We are pleased that [state insurance officials] recognized that the insurers' proposal was excessive and would significantly harm Massachusetts ratepayers."