FAIR Plan Rate Increase Request for Cape Cod Residents Denied
Cape Cod homeowners dodged a second straight 25 percent increase in insurance premiums after Insurance Commissioner Nonnie Burnes yesterday rejected an insurance association's request for double-digit rate hikes.
The FAIR Plan, as the state's insurer of last resort is called, had sought a 25 percent rate hike for Cape Cod and the Islands. Other parts of the state faced double-digit increases, too. The average increase statewide would have been 13.2 percent.
Some 150,000 Massachusetts residents and about 40 percent of homeowners on Cape Cod get their homeowners' insurance from the FAIR Plan, because they are no longer able to obtain affordable coverage in the private market. The number of FAIR Plan policyholders ballooned after insurers pulled out of Cape Cod's market following a spate of hurricanes in Florida and the Gulf Coast in 2004 and 2005.
The FAIR Plan is allowed to submit another request for rate increases. But the tone of insurance Commissioner Nonnie Burnes' decision on the first request indicated the insurer will have to be more persuasive if it asks for another rate increase.
Burnes said that the FAIR Plan failed to prove that "its rate falls within a range of reasonableness and that its proposed rates are not excessive, inadequate, or unfairly discriminatory." The FAIR Plan, she said, "failed to meet its burden on a number of critical fronts."
FAIR Plan president John Golembeski did not comment on the decision.
Published on May 9, 2008
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