A steep rate hike is in the offing for the only home insurance available to many Vineyard residents.
The FAIR Plan has proposed a rate increase of nearly 10 per cent for the Cape and Islands.
According to information released by the Massachusetts Property Insurance Underwriting Association, also known as the FAIR Plan, owner-occupied home insurance rates would increase 9.9 per cent, the maximum increase allowed, on the Cape and Islands. The proposed average increase in the state is seven per cent.
The proposed rate hike can be tracked directly to predictions for increased property losses from severe storms and hurricanes, said Robert Tommasino, general counsel for the MPIUA. “The hurricane model that we use to predict both likelihood and severity of hurricanes in different parts of the state of Massachusetts [is the reason],” he told the Gazette Thursday.
The model, he said, “predicts greater losses and more frequent losses on the Cape and the Islands than most of the state,” with the exception of the south-facing coast, he said. Thus the increase “really is driven by the hurricane models and the reinsurance costs, which are weighted toward the Cape and Islands.” He noted that the Cape and Islands are not the only area to see the maximum increase. Seven other districts, including Lynn, Springfield and parts of Boston, also have a proposed rate increase of 9.9 per cent. He also said that without the 9.9 per cent cap, the suggested increase for the Cape and Islands would be 13.3 per cent.
The state legislature created the FAIR plan in 1968 to provide an insurance option for people who could not get coverage on the private market. About 54,000 people on the Cape and Islands are insured through the plan, including about 6,354 people on Martha’s Vineyard.
The FAIR plan has not had a rate increase since 2006. Last May, a 7.2 per cent average increase — 6.7 per cent on the Cape and Islands — was rejected by the division of insurance commissioner.
The proposed rate change was filed April 12 with the Massachusetts Division of Insurance; the proposed rates could go into effect July 1.
A public hearing on the proposed change will likely take place within the next 30 days, and the approval includes review by the attorney general and the state rating bureau.
Mr. Tommasino said he expected the process to be completed sometime this summer.