Massachusetts’ residual insurance pool will once again attempt a rate increase for its 150,000 thousand policyholders and look to catastrophe modeler AIR Worldwide and broker Guy Carpenter to provide backup.
The Massachusetts Property Insurance Underwriting Association (MPIUA), also known as the Massachusetts FAIR (Fair Access to Insurance Requirements) Plan, filed for an average 7 percent premium increase with the state’s Division of Insurance earlier this month. The rates are set to take effect on July 1 if approved
Prompting the rate request are changes in the state’s estimated modeled loss, says Robert Tommasiono, general counsel for the FAIR Plan. “The rate increase is generally driven by the fact that our last rate filing that was approved in 2010 was based upon an earlier version of the AIR model that significantly affected our expected losses,” he explained in an email statement.
Tommasiono added that AIR, as well as Guy Carpenter, will provide evidence in favor of the rate increase during hearings later this month and June.
Approval for any increase is far from certain. In recent years insurance regulators and Massachusetts Attorney General Martha Coakley successfully blocked and premium increases by arguing that they were excessive and unfair.
During rate hearings last year, Coakley took direct aim at the industry by arguing that the proposed increases were “largely based on undisclosed hurricane models that insurers claim predict the likelihood and damage of a major hurricane” as well as reinsurance costs her office argued were not “justified.”
The FAIR Plan was last granted an increase in 2010, with not price bump in 2005, 2007, 2008, 2009, 2011 and 2012, Tommasiono said.
