A hearing on the MPIUA’s Filing for Named Storm Deductible Forms and Rules has been scheduled
The Division of Insurance has issued a Notice of Hearing scheduling a hearing on The Massachusetts Property Insurance Underwriting Association’s (“Fair Plan”) Filing on “Named Storm Deductible Forms and Rules.”
The public hearing will take place at 10:00 a.m. on February 23, 2017, at the Division of Insurance (“Division”), Hearing Room 1-E, 1000 Washington Street, Boston, Massachusetts, 02118-6200.
The purpose of the hearing to consider whether the Commissioner of Insurance should approve the filing concerning Homeowners Multi-peril and Dwelling Fire and Extended Coverage policies issued through the FAIR Plan. In order to assess this issue, the hearing will permit interested individuals as well as the general public the opportunity to comment.
Docket No. G2017-02
According to the Division, the FAIR Plan has submitted a filing that includes “…a rate analysis, rules and form provisions for the proposed Named Storm Deductible. The filing does not specify an effective date. The MPIUA filing may be examined at the Division’s offices during normal business hours.”
The deadline to submit a notice of intent to make an oral statement is February 21, 2018
The following is more information directly from the Notice:
The hearing shall be conducted in accordance with the provisions of Massachusetts General Laws, c. 174A, c. 175A, c. 175C, and c. 30A; and 211 CMR 101.00, et seq. Any person who wishes to make an oral statement on February 23, 2018, is asked to submit a Notice of Intent to Make a Statement on or before February 21, 2018…
Any person, other than the State Rating Bureau or a statutory intervenor, who wishes to appear and present testimony in this matter may file a written petition for leave to intervene or to participate, which includes any data that the petitioner intends to introduce at the hearing, no more than four business days after publication of this hearing notice, and must serve the petition on the MPIUA, the State Rating Bureau and any statutory intervenor that appeared in the most recent hearing on MPIUA rates. The
MPIUA, the State Rating Bureau and any statutory intervenor who has filed a notice of appearance shall file any response to the petitions to intervene or to participate within five days after service of the petition.
Where to send a notice of intent
Notices of Intent may be sent to the Docket Clerk, Massachusetts Division of Insurance, at the address shown below or by electronic mail to Doidocket.Mailbox@state.ma.us. All other persons will be heard after those who submit such notice.
Jane Logan says
I have a copy of the filing-it’s available from the Division of Insurance as an email attachment and is only 182 pages. Please review the filing before offering comments. The change to a named storm deductible sounds good, but please keep in mind a significant number of dwellings insured by MPIUA are insured far above the estimated reconstruction cost. So a named storm deductible on a policy with a dwelling limit above the reconstruction cost increases the wind or named storm percentage deductible based on an inflated dwelling limit. Do a file audit of your MPIUA policies to compare the reconstruction cost versus the dwelling limit. If the dwelling limit is more than 10% above the replacement cost estimate, MPIUA is required to send a letter to the agency to alert the agent to the value discrepancy. More often than not, Insured’s would be better off to lower the dwelling limit to the reconstruction cost and increase the Building Ordinance coverage – see the related article on this site about the recent E & O claim because of insufficient Building Ordinance coverage. Save a copy of the MPIUA inspection to justify lowering the dwelling limit and increase the Building Ordinance coverage.
T. Orlando says
Jane – Great recommendation! However, the MPIUA inspection reports are no longer available in the policy detail. The agency MS/b is attached as submitted but we have to call the MPIUA on each policy to request a copy of the inspection report and related replacement cost estimate. The documents are faxed to the agency upon request.
Jane Logan says
I found a link to the MPIUA Named Storm Deductible filing, the devil really is in the details: https://www.scribd.com/document/370816852/MPIUA-Filing
Jane Logan says
T. Orlando. That’s the procedure for inspections completed before MPIUA changed to a new computer system, I don’t know about inspections completed since they changed to their new system-I’ll bring the issue up at the hearing on Friday. For now, on the MPIUA website on any policy select “policy details”, on the bottom of that page below Territory the estimated replacement cost is shown. For example, I have a very small house-an 864 square foot ranch, MPIUA replacement cost estimate is $185,822, the dwelling limit on my policy is $215,000 – 14% higher without 100% Building Ordinance Coverage (I increased my Ordinance limit from 10% to 25%) but my house is still way over-insured based on the RC estimate.making my wind deductible of 2% $4,300 instead of $3,716.,44 – $583.56 higher.. The RC to insured limit on my policy isn’t an isolated case. If I still owned an agency or was a Personal Lines Account Manager, I’ll order a copy of the MPIUA inspection on every policy in force. This is a low level function that any administrative employee in the agency can do and it’s well worth the effort to prevent an E&O claim. By insuring dwellings far above the RC cost MPIUA is collecting premium on an inflated exposure while at the same time reducing their exposure via the increased wind deductible because the dwelling is over insured. You don’t want to be the agent explaining to an attorney why your insured’s house was insured for so much more than the estimated RC at the same time explaining why you didn’t reduce the limit and increase their Building Ordinance coverage. RC and reconstruction cost are based on current building codes, but policies don’t provide 100% building ordinance coverage. The valuation issues between replacement cost, versus reconstruction cost versus increased cost due to building ordinance and “replacement cost language” in policies is the most important coverage issue in insurance today-we need more agents advocating for change to protect consumers and prevent E & O claims.
Jane Logan says
MA Division of Insurance MPIUA 4/19/18 hearing cancelled “The State Rating Bureau advised me this morning that the parties to this proceeding have been negotiating a possible settlement, and therefore will not cross-examine the FAIR PLAN’s actuarial witness on April 19. For that reason, tomorrow’s hearing is cancelled. If a hearing is needed, it will be scheduled at a later date. Jean Farrington and Kristina Gasson, Presiding Officers” per email I received Jean Farrington of the Division of Insurance this morning.
Jane Logan says
The Named Storm Deductible filing language wasn’t clear. MPIUA claimed the filing was a huge improvement for consumers as the deductible would only apply to Named Storms, not all wind damage. However, the way the filing read, Named Storm included direct and indirect damage from hurricanes, tropical storms, winter storms and severe thunder storms which would potentially make more damage (for example frozen pipes in winter due to power outage) subject to the deductible. Also, MPIUA’s 2018 CAT Bond is an Indemnity Bond and it included winter storms and severe thunder storms. I questioned why MPIUA would purchase an Indemnity CAT Bond with different triggers than the primary coverage, but neither MPIUA nor Division of Insurance respond to questions from the public at rate hearings.
The Named Storm Deductible filing included different rate increases for Homeowner and Dwelling Fire polices. The increase ranged from around 1% to close to 4% depending on the location of the property.
I found out late Friday that MPIUA and the Attorney General’s office agreed to a settlement, the Division of Insurance approved or is expected to approve the Named Storm Deductible filing:
Homeowner Policy 1.1% rate increase
Dwelling Fire Policy 1.25% rate increase
I don’t know if this is an average or flat maximum rate increase for all properties on the coast and islands. The Named Storm deductible will apply only to named hurricanes and named tropical storms not winter storms or severe thunderstorms.
Hopefully the approved filing will be available for review soon, if the original effective date didn’t change the Named Storm deductible will be in effect for the 2018 hurricane season. The filing didn’t address if polices renewed after the effective date of the filing but before the filing approval will be endorsed mid-term, The Division of Insurance may include those details in their written decision.
The Attorney General’s office did a great job representing the people in the rate filing process. It would be nice if more agents took an interest in and participated MPIUA rate filings. The Attorney General and Division of Insurance hold public hearings for a reason-they need agent and consumer comments when making rate and coverage decisions.
Now it’s up to agents to make sure adjusters apply the Named Storm deductible correctly.