A Massachusetts Senate committee has recommended changing the state’s closed process for determining homeowners’ insurance rates, allowing residents and the Attorney General’s Office to challenge any rate changes before they are approved.
Due to record snowfall, many insurers operating in the region increased their homeowners’ insurance rates by almost 10% last year. The rate change did not fly with consumers, leading to a legislative hearing and proposals to amend the way Massachusetts’ Division of Insurance vets and approves changes to premium rates.
The Senate panel, dubbed the Post Audit and Oversight Committee, reported Thursday that homeowners’ insurance premiums surged by almost 22% between 2007 and 2013—even as home values dropped around the same period.
“The process is stunningly resistant to transparency and public discussions,” said Sen. Michael J. Barrett, D-
Lexington and chairman of the panel. “The result is a very lucrative area of the insurance business in the state. The companies do very well, the rates for the homeowners go up, even as the home values stagnated for years.”
According to The Boston Globe, the nationwide average premium was $1,263 in 2013, based on the latest data.
The panel found that as the rates increased, insurers in Massachusetts have been among the most profitable in the country and in the New England area.
The committee ultimately recommended that the Division of Insurance give consumers prior notice that insurers operating in the region want to raise their prices, as well as allow policyholders to share their comments.
Attorney General Maura Healey confirmed that her office is studying the report’s recommendations, but she agreed that the rate-setting process should be more “accountable to consumers.”
The Attorney General’s Office analyzed documents last fall that a number of the state’s major insurers used to rationalize higher premiums, The Boston Globe noted. The Attorney General found that the insurers were focused more on recent storms instead of longer-term trends typically used to calculate rates. The documents also suggested that some insurers requested rates to meet higher profit targets.
