The Division of Insurance required to produce an annual home insurance report pursuant to M.G.L. c. 175 Sec. 4A & 4B. This year’s report takes a look at 2019
The Division of Insurance has published its annual Home Insurance Report for the year 2019. The report provides a snapshot for the calendar year 2019 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 Division of Insurance 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.“
Where homeowners’ insurance fits within the Massachusetts insurance marketplace
Homeowners insurance continues to be the second largest line of insurance within the Property & Casualty marketplace in Massachusetts. According to the latest data from the DOI, insurers collected approximately $42.5 billion in written premium for homeowners’ insurance policies in Massachusetts during the year 2019. The following is a chart of the current composition of the insurance marketplace in Massachusetts based on data from the DOI.
Did homeowners’ insurance policies increase or decrease during the year?
To answer that question properly, it is important to note that the home insurance market in Massachusetts is composed of three major types of home insurance: condominium, traditional homeowners, and rental insurance. According to the latest figures from 2019, the total number of home insurance policies in Massachusetts increased by approximately 29,099 policies from 2018 to 2019, for a total of 2,048,711 policies in force during 2019. It is important to note, however, that traditional home insurance policies actually decreased by 5,081 during this time period, while tenant and condominium policies increased by 31,180.
In comparison, there were a total of 2,022,612 home insurance policies in force for the year 2018, which was an increased of 35,443 policies during the one-year period between 2017 to 2018.
In Agency Checklists’ chart below which uses data from the DOI Report, it is easy to see the continuing trajectory of home insurance policies over the past five years, from 2015 through 2019.
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 (2018), five additional insurers began writing home insurance in the Commonwealth, bringing the total number of licensed insurers actively writing home insurance to 84. 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, 2019.
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 2015-2019:
Total premiums by type of coverage
Traditional homeowners insurance policies continue to represent the lion’s share of the total premiums written in the home insurance marketplace, representing approximately 92.6% of the market. In total, Massachusetts insureds purchased approximately $2.6 billion in home insurance coverages during the 2019, a 4.5% increase over 2018. The following chart tracks the total premium by Type of Coverage from 2015 through 2019:
Average premium by type of coverage
The final data category to review in this first look concerns the average premiums charged in Massachusetts for condo, tenant, and homeowner policies. According to the latest figures, similar to 2018, average premiums increased in 2019 for traditional homeowners coverages, in this instance from $1,561 to $1,646.
Condo coverages also increased in 2019 to $483 from $470, a reverse from the previous year which saw the average premium decrease from $473 to $470. Tenant coverages decreased for the fourth year in a row, going from $221 in 2016 to $198 in 2019. 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
As Agency Checklists has done for the past few years, it will break the report up into a four-part series, focusing on different data published in the report. 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.