In an effort to bring relief to some Cape and Islands residents who already pay some of the highest home insurance premiums in the nation, state Rep. Eric T. Turkington earlier this week filed a bill that would institute a cap on future increases to the so-called FAIR plan, the state-backed insurer of last resort for many Vineyarders.

The FAIR plan, administered by the Massachusetts Property Insurance Underwriting Association, was created by the state legislature in 1968 to provide insurance for people unable to obtain coverage on the private market. In recent years, however, nearly all Island residents have been forced into the plan as private insurance companies have stopped covering the area, citing the possibility of devastating hurricane losses.

Last month, the Massachusetts Supreme Judicial Court upheld the FAIR plan’s 2005 rate increases, which included an annual increase of as much as 25 per cent for cities and towns across Cape Cod and southeastern Massachusetts. Meanwhile, another increase to the FAIR plan rates — which could mean a further 25 per cent increase for many Island homeowners — is currently under review by state insurance commissioner Nonnie Burnes.

If Mr. Turkington’s bill is signed into law it would establish a 5.9 per cent cap on all future increases to FAIR plan rates. í

Mr. Turkington told the Gazette this week that the court based part of its decision to uphold the 2005 rate increase on a section of an amendment to the FAIR plan that effectively allows insurers to offset losses from storms in other parts of the country like Florida and the Gulf Coast by raising the rates for homeowners on the Cape and Islands.

Mr. Turkington noted that Massachusetts has traditionally seen fewer hurricane and natural disasters then areas such as Florida. Only five hurricanes have made landfall in New England during the past half century, he said. He noted that FAIR plan customers have incurred back-to-back annual increases of as much as 25 per cent in the past two years, which exceeds what many can afford.

“There is this perception that home-owners on the Cape and Islands can afford these increases, and that is simply not true . . . [these people] have been paying higher insurance premiums and getting less and less coverage, all because of a panic attack in the market and its rating agencies after Hurricane Katrina,” Mr. Turkington said.

Several factors, including natural disasters such as hurricanes and the threat of global warming, have prompted many insurance companies to stop underwriting policies altogether for Island homeowners. The trend hit a critical point in 2004 when the Andover Companies stopped covering the region. Over the next three years at least seven more insurers declined to renew some or all of their Cape policies, leaving more than 43,000 homeowners looking for new insurance coverage.

Both Mr. Turkington and Cape and Islands Sen. Robert O’Leary earlier this year joined attorney general Martha Coakley in filing a dissenting report in opposition to a final report from a special legislative commission to review and recommend changes to the state insurance industry.

Both Mr. O’Leary and Mr. Turkington helped form the commission with an eye toward bringing reform to an industry in crisis. And while both lawmakers agreed with some of the ideas in the report — including the creation of a state catastrophe fund to offset costs in case of a large storm or natural disaster — they felt the final recommendations were too soft and failed to offer any real solutions.

The report, for instance, stops short of calling for a public review of computer storm models most believe are driving up the cost of insurance along the coast. Instead the report simply calls for the creation of an independent panel to study the accuracy of the models. Both lawmakers support a review of these storm models.

“These models seem to indicate a big storm or catastrophe is right around the corner, but for most Cape and Islands homeowners the biggest catastrophes they have suffered in recent years are the increases in their homeowners insurance rates,” he said.