In a July 30, 2018 bulletin to “All Massachusetts Licensed Producers (Agents, Brokers, and Special Agents),” the Massachusetts Property Insurance Underwriting Association (MPIUA or Fair Plan”) announced that its board of directors had “undertaken a significant initiative to depopulate the MPIUA.”
The depopulation method is for the Fair Plan to allow admitted carriers, if they are licensed to write homeowners insurance in Massachusetts and if they sign a “clearinghouse agreement,” to receive policy information from the Fair Plan the carrier may use to offer Fair Plan insureds voluntary policies.
According to the bulletin, the policy information provided by the Fair Plan will not include any personal identifiable information, but will include information about the insured and the property sufficient to allow the insurer to determine whether to offer homeowners insurance, through the policy’s listed producer, to the Fair Plan policyholder.
Clearinghouse for policy information being made available to carriers
For an insurer to access policyholder insurance coverage information to decide whether to issue a property insurance policy to an existing Fair Plan policyholder, the insurer must enter into a clearinghouse agreement with the MPIUA.
Under the agreement, the insurer must agree that it will only access or use Fair Plan policyholder insurance coverage information for the sole and exclusive purpose of determining whether it will offer to issue and to issue a property insurance policy to an existing Fair Plan policyholder.
In accessing or using the data, the insurer must use reasonable security protocols required by MPIUA to protect the privacy of MPIUA’s policyholders.
Also, insurers entering into a clearinghouse agreement may not share, give, distribute, supplied or sold to any other entity/person whatsoever, including, but not limited to, affiliated companies or marketing companies, except solely in connection with making a determination whether to offer to issue and issue a property insurance policy to an existing Fair Plan policyholder.
If the insurer provides any policyholder insurance coverage information to a third party, it must first obtain that third party’s written agreement to be bound by the restrictions regarding access, use, distribution and dissemination of such information as outlined in the Clearinghouse Agreement.
Producer rights protected under clearinghouse agreement
Under the Clearinghouse Agreement, insurers accessing depopulation information agree that for any policyholders, who have obtained coverage from the Fair Plan through a producer, the insurers will only communicate with such policyholder through that producer and will only make an offer to issue a property insurance policy to such MPIUA policyholder through that producer.
Also, the insurers agree to enter into a contractual agreement with that producer, if they do not already have such an agreement, which complies with the insurance laws, regulations, and rules of the Commonwealth of Massachusetts.
The requirement for dealing with a producer for any insured who utilized a producer to place their policy with the Fair Plan applies to direct writers. The only exception for a carrier not dealing with a producer is if the insured placed their policy directly without the assistance of a producer.
The bulletin advised that anyone with questions should contact the MPIUA’s Vice President and Chief Underwriting Officer, John A. Cantalupa, at 617-733-4053 or, by emailing him at jcantalupa[at]MPIUA.com.
Clearinghouse flow chart from the Fair Plan Bulletin
The following chart from the bulletin sets out the steps under the clearinghouse agreement
Information on the MA FAIR Plan in the Commissioner’s Annual Home Insurance Report
In our October 2017 article on the Commissioner’s Annual Home Insurance Report, Agency Checklists reported on the current state of the MA FAIR Plan from the latest data included in that report. In particular, we noted that while the MA FAIR Plan was actually the largest writer of home insurance in Massachusetts for many years, starting in 2015, however, that was no longer the case.
In fact, according to that report, the FAIR Plan decreased its market share by a total of 2,625 policies during the fiscal year 2014-2015. This translates into a market share now accounting for 11.4% of the the total written premiums in 2015.
The following chart illustrates the MA FAIR Plan’s Market Share reduction in market share over the past three years versus the remaining traditional homeowners insurance companies operating in the Commonwealth.
The Cape and Islands (which include Barnstable, Dukes, and Nantucket counties) continue to represent the principle market in which the FAIR Plan writes the majority of its policies, although this percentage also has seen a decrease as well. In 2015, the FAIR Plan wrote approximately 41.3% of all the homeowner’s policies in on the Cape & Islands, a 2.0% decrease from 2014 when it wrote 43.3% of the policies.
After the Cape and Islands, the FAIR Plan’s largest presence is in Suffolk County where it wrote 16.8% of the policies in 2015, a decrease of the 18.1% it wrote in Suffolk County in 2014. In the Commonwealth’s most populous county, Middlesex, which also has the highest number of homeowner’s policies in force, the FAIR Plan only wrote 3.3% of the total number of policies in this county.
Links to AC’s Four-Part Series on the DOI’s Latest Annual Home Insurance Report
For those interested in reviewing the state of the home insurance marketplace in Massachusetts, our readers can review our Four-Part Series on the Commissioner’s Annual Home Insurance Report from 2017.
- First Look At the Latest Annual Home Insurance Report for Massachusetts
- Second Look: The MA FAIR Plan Is No Longer The Largest Writer of Home Insurance In Massachusetts
- Third Look: A Further Look At Massachusetts Home Insurance Policies By County
- Fourth Look: Average Premiums, Claims, Combined Loss Ratios, and Cancellation Statistics and More
To see who are the top insurance companies in the Massachusetts Homeowners Insurance Marketplace, please refer to our latest
As always, if you have questions or would like to get in touch with Agency Checklists about this article, you can contact us here.
