The Division of Insurance required to produce an annual home insurance report pursuant to M.G.L. c. 175 Sec. 4A & 4B.
The Division of Insurance has published its annual Home Insurance Report for the year 2018. The report provides a snapshot for the calendar year 2018 with respect to the home insurance marketplace in Massachusetts. The Division of Insurance, which has published the annual report since 1996, is required to produce an annual home insurance report pursuant to M.G.L. c. 175 Sec. 4A & 4B.
Unlike the private passenger auto insurance in Massachusetts, there are no specific laws requiring that a property owner have home insurance. Notwithstanding that fact, however, homeowner’s insurance is the second-largest line of Property and Casualty coverage in the Commonwealth (after state-mandated personal auto insurance).
In order to create this Report. the DOI analyses aggregate data from both insurers and their statistical agents in the Massachusetts homeowner’s marketplace. All of the data collected is then sorted by Massachusetts zip codes and Insurance Services Office, Inc. (“ISO”) territories in order to produce the report. In publishing those findings, it reminds readers that,
“It is important to note that while some of the results in this report apply to all home insurance policies in the Commonwealth, other results apply to policies written by only the 25 largest Massachusetts home insurance companies, FAIR Plan and/or only to particular zip codes in the Commonwealth.“
The composition of the multi-billion dollar Massachusetts insurance marketplace
Insurers collected just shy of $2.5 billion in written premiums from home insurance policies within the Commonwealth in 2018. According to the Division, this is 3.5% more than was reported for in 2017. As a result, it is the second-largest insurance property and casualty line of insurance after personal auto insurance. The following is a chart of the current composition of the insurance marketplace in Massachusetts based on data from the DOI.
Home insurance policies increased from 2017 to 2018, but not as much as between 2016 to 2017
As many readers here are well aware, the home insurance market in Massachusetts is composed of three major types of home insurance: condominium, traditional homeowners, and rental insurance. There was a total of 2,022,612 home insurance policies in force for the year 2018, with an increase of approximately 35,443 policies during the one-year period between 2017 to 2018. While an increase of 1.8% in the total number of home insurance policies, it is worth mentioning that this percentage is less than the increase of 3.12% seen between the years 2016 and 2017.
In Agency Checklists’ chart below, using data from the DOI’s report, it is easy to see the upward trajectory of the Total Home Insurance Policies from 2015 to 2018. It is important to note, however, that the DOI noted in a footnote in its own chart that the reported increase in the total policies after 2017 is “primarily due to one carrier mistakenly under-reporting approximately 39,000 condo and tenant policies prior to 2017.”
Total policy numbers by types of home insurance coverage
In Massachusetts, policies issued in the home insurance market cover “…non-commercial property for the risks of damage to structural and personal property as well as for the risk of personal liability claims.”
Since the last Annual Home Insurance Report, a total of 79 insurance companies continue to write this line of insurance, meaning no new insurance companies entered the market here in 2018. It is important to note, however, that this number does not represent the total number of insurers licensed in the Commonwealth, rather only those who have written ten or more HO-3 or similar type policies in a Massachusetts county between July 1st – December 31st, 2018.
The following chart by Agency Checklists, using DOI data, takes a look at the total policies by type of coverage for each of these three types of home insurance from 2015-2018.
All three major types of traditional home insurance policies saw some sort of increases in 2018 as to the total amount of policies written when compared to 2017. With respect to traditional homeowners, however, the increase appeared to be slightest with the addition of only 2,250 more homeowners policies from 2017 to 2018. This number, however, is still less than the number of homeowner policies in 2015 when it was 1,452,671.
As for tenant policies, this category saw the addition of 23,973 policies from 2017 and 2018. Condominum policies also saw an increase, but not to the extent of the amount of Tenant policies.
Total premiums by type of coverage
Of the almost $2.5 billion written in the home insurance marketplace in 2018, approximately 92.7% of the total premium paid was for traditional homeowners insurance, with premiums increasing by approximately $75.4 million in 2018. This is about $12.6 million more than the $62.8 million premium increase between 2016 and 2017.
Average premium by type of coverage
The final data category to review in this first look concerns the average premiums charge in Massachusetts for condo, tenant, and homeowner policies. According to the latest figures, average premiums increased in 2018 only for traditional homeowners coverages. In this instance it increased from $1,520 to $1,561 from 2017 to 2018. Both condo and tenant coverages decreased, from $473 to $470 for condo covrages and from $218 to $203 for tenant coverages. The following graph charts these numbers for the years 2015 through 2018.
More to come on the Annual Home Insurance Report in the coming weeks
With so much information packed into this annual report, Agency Checklists will break the report up into a four-part series, similar to other years. The coming weeks will see further articles on the state of FAIR Plan, home insurance coverage by counties, the impact of auto insurance and flood insurance on this market as well as financial results from the report.