The Third Article in a Four-Part Series on the 2014 Home Insurance Report
This is the third part of a four-part look at the Commissioner’s Annual Report on Home Insurance in Massachusetts. Since 1996, the DOI has been required to produce a home insurance report pursuant to M.G.L. c. 175 Sec. 4A & 4B. Unlike private passenger auto insurance, in Massachusetts, there are no laws requiring that a property owner have home insurance.
This year’s Report cites a 2.1% increase in the overall number of home insurance policies in the Commonwealth between the years 2013 to 2014. The increase is a reverse of previous years, in particular from 2012 to 2013, which saw slight decreases in the overall number.
There were only two events classified as loss catastrophes in the year 2014. The first event took place between January 3rd-5th and consisted of flooding, freezing ice, and high winds. The estimated property loss for the January event was approximately $41.4 million.
The second loss catastrophe event occurred between July 26th and July 28th. It consisted of flooding, hail, tornadoes, and high winds. The estimated property loss stemming from this second event was approximately $39.7 million.
This week, we review the Commissioner’s findings on home insurance coverage by county. As just a reminder, in 2014 there was a total of 1,901,864 home insurance policies in force. Breaking that number down further:
- 217,183 of those policies were condominium home insurance policies;
- 1,451,027 of the total number of policies were traditional homeowner policies; and
- 233,654 of the policies were rental insurance or tenant policies.
Home Insurance Coverage Rates By Massachusetts County
When looking at home insurance rates by county, Middlesex County had the most policies with 435,384 in force for the year 2014. The following is a list of the remaining counties and the home insurance policies they had in force in 2014 in descending order.
| 2014 Home Insurance Policies | By County |
| Middlesex County | 435,384 policies |
| Worcester County | 231,534 policies |
| Norfolk County | 208,776 policies |
| Essex County | 201,270 policies |
| Hampden and Hampshire Counties | 161,959 policies |
| Plymouth County | 153,724 policies |
| Bristol County | 145,261 policies |
| Barnstable, Dukes and Nantucket | 139,835 policies |
| Suffolk County | 136,273 policies |
| Berkshire and Franklin Counties | 87,847 policies |
Percentage of Home Insurance Policies Voluntary vs. FAIR Plan
The next chart graphs the amount of home insurance policies by county. In addition, it shows what percentage of the total policies in each county were voluntary versus policies issue through the FAIR Plan. As to be expected, with the FAIR writing approximately 43.3% of the total policies on the Cape and Islands, that market share is represented in the graph in the counties representing those areas: Barnstable, Dukes and Nantucket.
The chart from the Commissioner’s Annual Home Insurance Report, tracks the changes in home insurance policies by county from 2013 to 2014. As noted in last week’s article, the FAIR Plan either maintained or lost market share in each county between the years 2013 to 2014.
The Growth of Bundling Home and Auto in Massachusetts
Another interesting trend that the Commissioner noted in this year’s report was the growth of bundling home and auto insurance products together. Prior to the introduction of Managed Competition, the Commissioner noted in his report that during hearings held in the mid-2000s, many large national companies were not interested in expanding home insurance coverage in Massachusetts. The main reason why was that these companies believed that they could not operate within the rules of the old
Fixed and Established” system.
As of today, almost eight years after the introduction of “Managed Competition” and Massachusetts has seen an additional 15 insurance companies which have entered the private passenger automobile insurance market since then. As a result, in addition to increased competition within the private passenger automobile insurance marketplace, many insurers now have begun offering “expanded multi-policy premium discounts to insureds who buy both home insurance and automobile insurance coverage from the same company.”
In the face of this new trend in Massachusetts, the Commissioner asked that the top 25 home insurance companies in Massachusetts report the level of home insurance premium credits that it provided to its insureds in both 2013 and 2014 who also has motor vehicle coverage with their company or an “affiliated insurer.”
Home Insurance Credits With Auto Insurance Policy
According to the report, premium credits for home insurance coverage that went along with a related auto insurance policy increased $3.8 million from $55 million in 2013 to $58.8 million in 2014.
Number of Home Policies Receiving Premium Credit for Auto Insurance
In terms of actual number of policies, according to the Division, 550 more home insurance policies received premium credits in 2014 than in 2013. The credits were a result of insureds having related private passenger coverage. In addition, looking at specific areas, 2,528 more home insurance policies in urban areas obtained premium credits for related private passenger coverage in 2014 than in 2013.
Credit average also increased from 2013 to 2014
The average credit for auto and home bundling also increased from 2013 to 2014 by approximately $15. That is in 2013 the average credit per policy was $239 while in 2014 it increased to $254 per policy. This last graph from the report illustrates charts the growth of the average percentage level of premium credit per policy from 2013 to 2014. In urban areas the average policy premium credit increased from 14.5% to 15.1% in this time period, whereas in the coastal areas the average premium credit per policy increased from 15.1 to 16.4%.
