The Home Insurance is issued each spring by the Mass. Division of Insurance
The Massachusetts Division of Insurance has issued its annual Home Insurance Report citing a dramatic drop in claims in 2012, the latest year for which the Division had data. Since 1996, the DOI has been required to produce a home insurance report pursuant to M.G.L. c. 175 Sec. 4A & 4B. Homeowner’s Insurance in Massachusetts is the second largest line of property and casualty coverage in the Commonwealth with insurance companies here collecting approximately $1.9 billion in written premium for home insurance policies.
According to the DOI, in 2012, insureds filed a total of 82,334 claims with their home insurance companies. This amount is approximately 66.0% fewer than the 241,857 that were filed in 2011. As noted by the Division, much of the 2012 claims, however, were due to the lack of major weather events being classified as “loss catastrophes.”
Even though claims were down significantly in 2012, it is interesting to note that the average size of the incurred claims, increased. For traditional home insurance claims increased by 35.7%, while for condominiums it was 27.4% and 45.0% for tenants. As explained by the Division, “The increase in average claim size reflects the reduced number of weather-related claims, which typically are smaller than fire claims.”
Without question, the major weather event of 2012 was “Storm Sandy”. Attacking the Massachusetts coast on October 29, 2012, Storm Sandy inflicted “catastrophic damage” on homes and properties in Barnstable, Bristol, Dukes, Nantucket, Plymouth and Suffolk counties. As a result of this weather event, President Barack Obama declared those affected areas as a Federal Disaster Areas thus allowing them access to certain federal assistance.
Overall home insurance policies decreased by 5,187 or -.03% between 2011 and 2012
As of August 30, 2013, the Division says that more than 95% of the 24, 174 personal property claims associated with Storm Sandy had been settled. The average personal property claim payment was $3,659.29 with insurance companies overall paying out $88.5 million for damages to automobiles, homes and associated personal property.
As for commercial claims, the Division says that over 91% of the 1,504 commercial property claims stemming from Storm Sandy were also settled by August 30, 2013. For commercial claims, the average payment per commercial property claim was $8,159.73 with insurers paying out a total of $12.3 million for damages to commercial vehicles and property, including business interruption claims.
MAPFRE gaining on the MA FAIR Plan
While overall home insurance policies in Massachusetts decreased between 2011 and 2012 an interesting trend is to see the continued erosion of the MA FAIR Plan’s market share in Massachusetts. While the FAIR Plan, the residual market for home insurance in Massachusetts, continued to write 45.9% of the policies for both the Cape and the Islands, overall total enrollment in the FAIR Plan decreased by 715 policies in 2012. As a result, the MA FAIR Plan currently writes a mere 12.7% of the 2012 home insurance premium as compared to 2007 when it boasted a 16.1% market share. In comparison, MAPFRE/Commerce which is the largest writer of personal auto insurance in Massachusetts claimed an 11.1% share of the home insurance market in 2012.
This other graph from the Division of Insurance better illustrates how the top 10 home insurance companies fare alongside the MA FAIR Plan.
A Three Year Retrospective Shows Little Growth
As mentioned above, while more insurers seems to be offering homeowner’s policies in Massachusetts, particularly as a result of Managed Competition, overall total home insurance policies written by insurance companies actually has decreased rather than increased over the last couples of years. In fact, between 2011 and 2012, home insurance policies decreased by 5,187 or -0.3% after having slightly increased between 2010 and 2011.