Residents on Cape Cod, long forced to buy their homeowners coverage from the state’s insurers of last resort, are breathing a sigh of relief after the Massachusetts Division of Insurance blocked a rate hike on their policies in recognition of the tough economic climate in the United States.
The insurer of last resort or FAIR programs were created in the 1960s to provide insurance to homeowners in areas prone to storms and floods. In Massachusetts, 153,675 residents are covered by FAIR plans, most in the southeastern sections of the state or on Cape Cod. The program is administered by the Massachusetts Property Insurance Underwriters Association.
The Association pushed for an increase in plan premiums of 2.4 percent on Cape Cod and 10 percent in New Bedford, Worcester, and Springfield. The state Division of Insurance, however, rejected the requests and overall, premiums will actually decline by an average of 1 percent. (In Boston, the rate decrease will be a pull 10 percent.) The Association justified its call for higher fees by citing an upsurge in claims for fires and ice storms.
The state’s acting insurance commissioner, Joseph Murphy, said, “This is good news for consumers who are feeling the effects of the economy. He added that the increases sought by the association “did not appear to be justified.”
The head of Citizens for Homeowners Insurance Reform, a 6,000-member group, Paula Aschettino who owns a house in Eastham, said, “We are very pleased. This will be a great savings because our rates have been a terrible hardship.” The average homeowner on Cape Cod pays approximately three times what the owners of similar inland homes pay for equal insurance coverage.