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Thank you to all citizens who participated in the Friday, March 6th "phone meeting " with the Division of Insurance on this important issue.
Thank you Jane Logan for your report and comments Friday.
I did take a great seat at the head table, the room was full of insurance industry representatives.
I had contacted about 30 legislators from around the State as well as the Governors office, AG's office, and Financial Services Committee members to let them know about this "meeting". The DOI had not notified any other "citizen oriented contact except our group.This is wrong and gives lopsided input and power to the insurance industry who create language at the DOI for their benefit.
This was our recommendations on the deductible bulletin:
The Named storm 'Trigger" would only be a Land Hitting Hurricane in Ma, at hurricane wind speed. We wanted to delete the "trigger" of "Named Tropical Storm" since sustained winds in that event are 39 MPH -74 MPH. I reminded the insurers that according to the Saffir/Simpson Hurricane Damage Scale, even a Cat 1 Hurricane (winds 75-94 MPH) is described as producing "light Damage".
We wanted caps on the deductible to be 2% max of the replacement value on all MA properties.
We wanted no "optional deductible in the regulation. This was suggested by the Commissioner although from my understanding she too had concerns on this, where an insurer could "offer" a consumer a higher Named Storm deductible for a lower premium or a higher premium for a lower named storm deductible.
I feel this would be used by the industry against citizens, especially in areas such as ours with fewer companies for comparison. If private insurers increased "named storm" deductibles to 10% and offered a slightly lower premium, what do you do if you do not want this? Do we pay even more than we do now? Will citizens opt for this and in the event of a loss not be able to pay for repairs?
I stressed over and over, the process is ILLEGAL. There should be AG review and comment as well as Public Hearings prior to what we call a huge RATE HIKE for the insurance industry.
One Legislator from Swansea showed up and supported our view and thanked our group for notifying him. Senator O'Leary's aide called in to say the Senator was available for citizens calls on this matter. The Financial Services Committee aide called in to ask some questions.
I was allowed to speak several times in response to comments made. I did feel that the Rating Bureau Director Kevin Beagan ,who monitored this meeting from his phone, made several comments that have me questioning whether the DOI really understands the homeowners insurance practices in MA.
Kevin stated that the proposed changes to the deductible amount ( not to exceed 5% of the replacement value ) was NO change from the present. This is untrue because the Fair Plan Rule change several years ago allowed 1% wind deductibles to go to 2% (except on the Islands where all deductibles for Fair could go to 5%). Many, many policies are at 2% and to allow 5% WOULD be a huge increase.
The Insurance Industry had concerns such as:
If the Named Tropical Storm "Trigger" was removed, they "fear they would have to raise rates" due to losses they could not cover. Perhaps they would need to have both Hurricane and Wind/hail deductibles."
They did not feel the reduction of the "named storm" deductible as suggested by us , would fall under the power of the Commissioner without legislative change.
As Jane said, and I reminded them, the addition of wind deductibles in policies was never made by Legislative action, the Commissioner allowed wind deductibles and allowed a "rule change" on deductibles to the benefit of the industry several years ago so she has the power to "reduce" deductibles as well.
I also responded strongly to the "fear tactics" made by the industry on raising rates. First I reminded all that there have been low loss ratios in MA for over 10 years. Profits have been great. I reminded all that the insurers have been lowering homeowners rates inland the past several year to become more competitive for auto and homeowner policy packages,yet increasing coastal rates. Citizens in Coastal Ma are not going to carry the costs. Put the rates back inland if necessary.
The DOI is collecting comments for a period of 2 weeks, so any persons wishing to add comment please send a letter to the Commissioner of Insurance. Contact info is on our website.
I will post the next draft and date of the next meeting when I receive it. Any persons wishing to come to the DOI meeting with me to give comments directly on this Bulletin I welcome your efforts.
Sincerely Paula Aschettino
© 2013 Citizens for Homeowners Insurance Reform