The Third Article in a series on the 2018 Home Insurance Report
This is the third 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, however, there are no specific laws requiring that a property owner have home insurance.
As mentioned in our previous looks at this year’s report, the total number of insurance policies increased by 1.8% between 2017 and 2018, or by 35,443 policies. While an increase over the last year, it is just under half the increase of the 3.1% seen between 2016 and 2017.
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.
Catastrophic losses and estimated property damage in Massachusetts in 2018
According to the DOI report, estimated property losses in Massachusetts were $487.8 million in 2018. The majority of these losses resulted from five major events that the DOI classified as “loss catastrophes” that year. These include the following:
- A severe winter weather event took place from January 3 through January 6, consisting of flood, freezing, ice, snow and winds and resulted in estimated property losses in Massachusetts of over $94.5 million.
- Two events took place, one on March 1 through March 3 and the other on March 7 through March 8, consisting of flood, ice, snow and wind. These two events resulted in combined estimated property losses in Massachusetts of over $298.3 million.
- An event occurred May 12 through May 16 and consisted of flood, hail, tornado and wind with estimated losses of $4.1 million.
- A catastrophe resulted from a gas line overpressure incident discussed in detail in the following section. The resulting explosions and fires on September 13 and September 14 resulted in estimated property losses of $90.9 million.
Home insurance coverage rates by Massachusetts County
As just a reminder, in 2018 there was a total of 2,022,612 home insurance policies in force in 2018. Of those:
- 250,399 of those policies, were condominium home insurance policies;
- 1,452,126 of the total number of policies, were traditional homeowner policies; and
- 320,088 of the policies, were rental insurance or tenant policies.
The following is a table breaking down those numbers further by Massachusetts county:
|2018 Home Insurance Policies
|Hampden and Hampshire Counties
|Barnstable, Dukes and Nantucket
|Berkshire and Franklin Counties
When looking at home insurance rates by county, Middlesex County continues to have the most home insurance policies in-force with 462,941 for the year 2018.
Percentage of Home Insurance Policies Voluntary vs. FAIR Plan
The next chart graphs the number 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 38.4% 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 2017 to 2018.
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.
Analyzing the 2018 market, which marks ten years after the introduction of “Managed Competition”, the DOI notes that Massachusetts has seen an additional 17 insurance companies which have entered the private passenger automobile insurance market here since “the reform.”
As a result, in addition to increased competition within the private passenger automobile insurance marketplace, many insurers offer “expanded multi-policy premium discounts to insureds who buy both home insurance and automobile insurance coverage from the same company.”
Home Insurance Credits With Auto Insurance Policy
According to the report, insurers reported that premium credits on home insurance policies with a correlating auto insurance policy increased to $74.1 million in 2018 from $72.5 million in 2017.
Number of Home Policies Receiving Premium Credit for Auto Insurance
In terms of the actual number of policies, 2,084 more home insurance policies in urban areas received premium credits for private passenger coverage in 2018 versus 2017. Overall, 2,696 home insurance policies received premium credits in 2018 than in 2017 for having related private passenger coverage. The graph below shows a side-by-side comparison:
Credit average also increased, albeit slightly, from 2017 to 2018
The average credit for auto and home bundling also increased from 2017 to 2018 by approximately $4 or from $277 to $281 per policy. As shown in the graph below this represents an increase from 15.0% to 15.2% for the average urban policy and an increase from 16.0% to 16.2% for coastal area policies.
For those individuals interested in reading our earlier articles on the Annual Home Insurance Report from the Massachusetts Insurance Commissioner, please refer to the following articles: