Citizens for Homeowners Insurance Reform


The Financial Services Committee is holding a "Hearing" Wednesday March 13, 2013 at 11AM- Room A2 at the State House.

The attached two letters sent from the Attorney General's Office to the MA Division of Insurance ask for rate hearings on Homeowner Insurance charged by the Voluntary Market, the private insurers, due to excessive rates, especially at the Cape and Islands.

Very Powerful Data Raising Questions That the Commissioner Needs to Address

This is a letter I just sent to the Commissioner of Insurance.
The Private Insurers, Voluntary Market, have taken a 437% increase in rates since 1994- 2011, this is highway robbery. Our Commissioner of Insurance and past Commissioners is not doing the job to protect the consumer in rate filings from excessive rates.

Please call you State Rep and State Senator and ask for their investigation into this matter.

Please see supporting documentation here:

Paula Aschettino

Dear Commissioner Murphy,

I have compiled comparisons from the MA DOI Homeowner Reports dated 1994-2011 on "average rates" of the Voluntary Market and Fair Plan for Territory 37, Cape and Islands, and an inland Territory, 44, Middlesex Remainder, for the purpose of comparing the percent of rate increase.

My findings show "Very Powerful data raising questions that the Commissioner needs to address" as stated by Robert Hunter, Director of Insurance for the Consumer Federation of America of Washington D.C

The Voluntary Market rates have increased 437% in Territory 37 from 1994-2011 compared to a 100% rate increase for Territory 44.

A 437% rate increase is excessive and abusive to thousands of Cape and Island Citizens.

A 437% rate increase is not reasonable, affordable or sustainable.

A 437% rate increase for Territory 37 indicates lack of regulation and review by the Commissioner.

I have attached 4 years of loss ratios and you can see that Territory 37 has experienced a history of low loss ratios in both the Voluntary and Fair Plan Markets. Low loss ratios in Territory 37 are common going back many years prior.

We are a "Good Book of Business" and are being ripped off by the Insurance Industry and our Commissioner of Insurance is allowing this to happen.

As head of Citizens for Homeowners Insurance Reform, a large grassroots organization fighting the outrageous, excessive homeowner rates in coastal MA, I ask just how valid are these abusive prices and what is the proof?

We want proof of all aspects to these excessive rates to the Voluntary Market and we want it in an understandable and transparent way.

If the MA DOI cannot provide such proof to justify these rates we want a significant reduction of these rates immediately.

We shall ask the Attorney General for an investigation into this matter if we are not satisfied.

We ask our State Legislators to join our outrage and immediately ask the Financial Services Committee to investigate these findings.

We ask Governor Patrick to require his administration to act fairly to protect MA citizens from excessive rates.

I am told former MA Commissioner Jim Stone once said " a rate filing is made up of a few facts and a lot of factors". This is still true and not acceptable to us.

I ask for a meeting this February with you and your staff to further discuss this matter.

Paula Aschettino
Chair- Citizens for Homeowners Insurance Reform

Report of Bus Trip To Testify Against Rate Hike

Coastal Citizens joined voices Thursday Jan 19,2012 to fight the Fair Plan Rate Hike Request and rode by bus to Boston to testify before the Hearing Officer at the MA Division of Insurance .

30 citizens led by Paula Aschettino- Chair of Citizens for Homeowners Insurance Reform- filled the hearing room. Citizens spoke of the great financial burden of the high rates. Many told of living 70 yrs near the coast and never having losses from hurricanes. All complained of the continued increases to the replacement values of their homes which increases the premium and the deductibles.

Congressman Wm Keating and Senate President Murray sent testimony speaking against the rate hike.

Senator Dan Wolf gave a very impressive testimony and asked the DOI for careful review and investigation into this problem.

Sincerely, Paula Aschettino
Chair -Citizens for Homeowners Insurance Reform

Professor Gives 'F' Grade to State Regulators' Consumer Protection
September 15, 2011 | NU Online News Service

Cape leaders push for home insurance reform

Cape Cod Times
By Marjorie Nesin
September 14, 2011
BOSTON — Cape lawmakers and residents, fearful of the impact Hurricane Irene damage may have on already high insurance rates, urged a legislative panel on Tuesday to set stricter guidelines for companies writing coastal homeowner policies.

Click here for the entire article.

The most recent (2009) MA HOMEOWNERS INSURANCE REPORT has been posted at the MA Division of Insurance web site. Click here to read or download it. Below is a short review of a few pages from this report done by Robert Hunter, Director of Insurance for the Consumer Federation of America. I am meeting with the Rating Bureau Director at the MA DOI on Jan 7th to discuss this report.

The private market profits (Page 21) are unconscionable, even with CATs in 07 and 08. According to the NAIC, profit on net worth in MA for the decade ended 2008 was 17.3% while in USA it was 4.6%. Anything over 10% is excessive. Mass is grossly excessive. Gouging, pure and simple.

Last 5 years YEAR Return on net worth
           MASS USA
2004 16.3% 3.7%
2005 19.9 (2.8)
2006 22.6 18.5
2007 26.9 16.0
2008 20.1 (2.6)
Five Year Average
          21.2% 6.6%

And condos and tenants, forgetaboutit.

Page 22 shows the profit on home insurance in MA was $1.3 billion over the last 5 years! The line about insurers paying "as much as 25% of a company's premiums" is extremely misleading and defensive. There is no justification for the rape of policyholder/homeowners in MA as demonstrated here.

Page 23. Where are the underlying data like for private insurers shown on pages 21 and 22? We need the loss ratios and other data.

These FAIR Plan data look screwy to me. Census data for 2009 show 2.7 million housing units in MA of which 61.7% are homes (the balance is units in apartment buildings). So about 1.7 million homes? The data on page 23 show that there was $26,331,000 or underwriting profit, or $136.19 per policy. This means that there are 193,000 homes in the FAIR Plan or 11.4% of the state's homes in FAIR. Does this sound right? That is incredibly high compared to other states.

The data show that the FAIR Plan produced $160 million in profit over the last 5 years. That is 11.0% of the overall home insurance profits in the state ($1.6/{$1.3 billion + $0.16}). If FAIR is 11% of the market and producing 11% of the profit, FAIR is equally profitable to private (i.e., also gouging).

Please click below for the Homeowners Bill I have been working on. I sent my Bill to Robert Hunter, Director of Insurance for the Consumer Federation of America to review and make comments. I am posting the Bill with Mr. Hunters comments ( Red Bold Print) Mr. Hunter is a strong advocate for Consumers on Insurance issues and is asked frequently to testify in Washington on Insurance matters. He is a supporter of our efforts to reform Homeowner Insurance in Coastal MA. We will be working his suggestions into appropriate language before final submittal.

I met with the Financial Services Committee Chairman at the State House and he feels we should select several parts of the Bill to bring forward first and concentrate on so as to gain passage. We do want movement on this important issue.

Click for Homeowners Bill

Paula Talks with Paul Gauvin of The Barnstable Patriot:
Unfair homeowner-insurance premium issue said orphaned by state Legislature - 4/9/2010

Paula's Letter Concerning 20 New Bills
After looking at the 20 bills and the short time frame allowed for notice to hearing, I am asking for a postponement of the March 3rd, 2010 hearing. I have many questions on the bills. Please read my letter below and call your legislators to ask for a postponement until we have an explanation on these how these bills will impact citizens.

  • Click here to read Paula's Letter

  • January 15, 2010
    The Attorney Generals Office has made a settlement with the Fair Plan regarding their recent rate hike filing at the Division of Insurance. The Cape and Islands and Fall River will NOT receive the proposed 2.4% rate increase, but will remain the same. New Bedford will receive a 5% increase instead of the 10% proposed. Other Fair Plan territories in the State will see varying increases and Boston will receive a decrease in rates.

  • Click here to read the Decision and Order
  • Click here to read the Stipulation

  • Here is the link to the Florida Commission's Report of Activities. This shows how the standards are reviewed in Florida.

  • Hurricane Loss Methodology

  • Thank you to all citizens who participated in the Friday, March 6th "phone meeting" with the Division of Insurance on this important issue.

  • Click here for Paula's report on the meeting with DOI
  • Click here for a draft of the Wind Deductible Bulletin

  • Burnes refuses to speak to Coastal Citizens
    For the third straight year Insurance Commissioner Burnes has refused our request to come speak to the Coastal Citizens on why our rates continue to go up.
    Please read her assistant's non-response here:
    Beagan's Response

    Senate Bill, No. 2778 Passes. No Bill is Better Say Citizen's.
    There has been much controversy regarding the recent Senate Bill # 2778 and its potential to negatively impact coastal property owners.

    Citizens for Homeowners Insurance Reform would support a Bill that includes the following modifications and additions:

    1. The Attorney General should have the right to trigger a rate hearing on any homeowners insurance rates -- both before and after they become effective for any reasons the AG feels necessary. This we believe is of vital importance to protect citizens.
    2. Section 7 should be deleted entirely.
    3. The Hurricane deductible trigger language should be modified to give the proper description of a Hurricane -- the National Weather Service declares a windstorm with sustained winds (2 minutes or longer) at or above 74 MPH which makes landfall anywhere in the Commonwealth.
    4. The Center for Hurricane Research should be deleted at this time.
    5. Additional money should be appropriated to the AG's office for the consulting/testimony of experts in homeowners insurance rate hearings. Citizens deserve to have our monies be available to defend ourselves with the best experts. In addition, no hurricane model should be relied upon for rating purposes if the AG did not have access to any information it deemed necessary to review the model.
    6. The unlimited guaranteed replacement insurance should remain in the Fair Plan Policies --delete #5 of the Bill.
    7. We are willing to give up the refund clause at this time because it misleads citizens into expecting a refund when the language of the clause makes it highly unlikely that any significant refund will ever be received.
    8. Language should be added to require the DOI to hold a public hearing before the Commissioner or Fair Plan makes changes to the "Operation of the Fair Plan."
    Please take a moment to compare these changes with the current Senate bill here:
    Senate Bill, No. 2778
    Reasons why Coastal Citizens oppose this bill.

    The Commissioner of Insurance Denies Rate Hike
    Nonnie Burns has made a decision on May 8, 2008 to deny the Fair Plan's 2007 request for a 25% rate hike due to failure to meet its burden of proof. The MPIUA (Fair Plan) may submit new rate filings that comply with this decision and Order.
    Click to read the FAIR Plan decision.
    Click here for the appendix to the FAIR Plan decision.

    Act to Protect Consumers of Homeowner's Insurance
    Representative Cabral and Senator O'Leary's bill to amend Section 5 of Chapter 175C of the General Laws which would put caps back on the Fair Plan rate hikes in Coastal MA ...more

    Property/Casualty Insurance in 2008:
    Overpriced Insurance, Underpaid Claims, Unjustified Profits, Padded Reserves & Excessive Capitalization

    by J. Robert Hunter Director of Insurance Consumer Federation of America

    Click here to read the entire article.

    Citizens for Homeowners Insurance Reform
    Open Meeting Agenda

    AG Martha Coakley Contests Fair Plan Rate Increases
    Urges Rejection of Industry’s Planned 25% Rate Hike for Coastal Communities ...more

    Wind Damage at Cape Cod
    A letter from Paula explaining the DOI report on homeowners insurance 2006 ...more

    Special Commission created to review the current state of the homeowners insurance market in the Commonwealth.
    Final Report to the Members of the Massachusetts State Legislature, November 30, 2007 ...more


    Washington, DC - Congressman Bill Delahunt joined with his colleagues in the House to urge Senate Majority Leader Harry Reid to support legislation that will help coastal states like Massachusetts expand access to affordable homeowners insurance. ...more

    Dissenting Opinions
    The Special Commission On Homeowners Insurance  ...more

    Additional Views On The Recommendations Of The Special Commission On Homeowners Insurance
    Submitted by:
    Representative Eric T. Turkington
    Senator Robert A. O'Leary  ...more

    Dissenting Opinions
    The Special Commission On Homeowners Insurance  ...more

    Chatham Board of Selectmen Sign On!

    October 30th the Chatham Board of Selectmen voted as a board to sign on to our organization and stated their intent to support the Citizens for Homeowners Insurance Reform. They believe in our mission and now join the Towns of Truro, Provincetown, Wellfleet Eastham,Orleans, Brewster and Harwich to support Citizens for Homeowners Insurance Reform with a formal Selectmen Board Vote.

    We will be speaking before other Cape Towns this fall and winter to ask for all communities to help make insurance reform happen. Together we have a stronger voice.

    We are pleased to have these towns working with their citizens and taking actions, supporting bills and initiatives that will reduce the high cost of homeowners insurance in Cape Cod and the Islands.

    Protest/Demonstration Great Success!

    Our protest/demonstration went fantastic Monday! We had 26 Citizens from the Cape board a bus and into Copley Sq. we traveled. A small number of coastal property owners joined us in Boston and we held our picket signs high from 1pm to 3:15pm. The Property Casualty Insurers Association of America were across the street at the Westin Hotel attending their Annual National Meeting. Many walked by us on this beautiful, sunny afternoon, taking note of the sayings on our signs and taking an occasional photo.

    Cape Citizens surrounded by towering buildings, the Boston Public Library, in a historic Boston Sq. exercised their Democratic Right to gather and demonstrate their cry of " Outrageous insurance premiums and coastal discrimination." Rep. Turkington joined us and held a sign high as well. Many citizens stopped and asked of our cause, some had families affected by the rising costs of homeowners insurance in coastal Ma.

    A Re-Insurance Broker from Bermuda came out and we held a professional discussion on the reasons for the high cost of re-insurance. We told him of our support of Senator O'Leary's Catastrophic Bill so the need to buy the high priced, unregulated re-insurance can be dropped and a savings can be enjoyed by the people!

    I give him credit to have joined us and thank him even though we did not always see things the same way.

    The Citizens felt empowered with their participation in this protest, for many, myself included our first! But not our last! We accomplished what we had come out to do: Get the attention of the Insurance Industry and to let them know Coastal MA citizens are not going to sit back and take the unfair practices of the insurance industry.

    We had great press with interviews from 2 Boston Public Radio Stations, a live radio update to our own Cape Station WQRC en route and Sarah Shemkus from the Cape Cod Times traveled on the bus and covered the event.

    The Citizens for Homeowners Insurance Reform supports the Attorney Generals recent recommendation of a Fair Plan Rate Reduction of 29% for the Cape and Islands and will begin writing several Bills and directives for the Commissioner of Insurance for the purpose of reducing the homeowners Insurance Reates for Coastal Ma citizens.

    Thanks Paula Aschettino

    The Special Commission studying homeowners insurance rates in the Massachusetts Coastal area convened on September 7th at Cape Cod Community College in Barnstable.

    Click here to read the report.

    Alan's letter to Rep. Mariano and Sen. Buoniconti
    I hope that your staffers will see the import of bringing this to your attention. It is an adjunct to the hearing that you held at the CC Community College today. You were gracious to come to the Cape to be subjected to our vitriol, but Gentlemen, we charged you with a responsibility and we're all watching to see what you do in response to our pain ...more


    NAIC Survey Shows Lack of Awareness Among Consumers When it Comes to Their Homeowners Policies

    Please click here for the full report.


    Report on the Public Hearing before the Commissioner of Insurance - April 27, 2007

    Please click here for the full report.


    For the second time in a year, national consumer groups called on state insurance regulators and the National Association of Insurance Commissioners (NAIC) to reject severely flawed hurricane projections used by insurers to sharply increase rates on property insurance policies in states along the Atlantic and Gulf coast.

    Click here to read the entire article.

    Property/Casualty Insurance in 2007:
    Overpriced Insurance, Underpaid Claims, Declining Losses and Unjustified Profits

    by Robert Hunter Director of Insurance Consumer Federation of America

    "In 2004, the Property/Casualty Insurance industry set an industry record by netting an after tax profit of $40.5 billion. In 2005,even considering Hurricane Katrina and other major hurricanes, the industry posted a profit of $ 48.8 billion--a new record. In 2006, with no major hurricane activity coupled with premium increases, the industry set yet another profit record, estimated to be $ 68.1 billion. To put this into perspective the $157.4 billion in profit over the last three years equates to roughly $524 for every American, or $1,574 per household."

    Click here to read the entire article.

    Ethicist Questions Insurance Rate Data
    The Tampa Tribune
    Published: Jan 12, 2007

    A new computer model that has contributed to large spikes in property insurance rates in coastal areas should have had full review by outside experts before it was released, the ethics chief of the world's largest general scientific society said.

    Research Management Solutions of Newark, Calif., introduced the product to the market long before the scientific peer review process was finished.

    "It's ridiculous from a scientific point of view. It just doesn't wash well in the context of the way science is conducted," said Mark S. Frankel, director of the Scientific Freedom, Responsibility & Law Program at the American Association for the Advancement of Science, in Washington.

    Click here to read the entire article.

    Report On The Current State Of The Homeowners Insurance Market In The Commonwealth
    Julianne M. Bowler
    Commissioner of Insurance
    November 29, 2006

    Cape Cod and Hurricanes

    Because of the perceived increase in coastal hurricane risk, the Cape Cod and Islands area (composed of Barnstable, Dukes and Nantucket Counties) has needed to face a market with more expensive and reduced options for homeowners coverage. With the wealth of statistical experience that was derived from damage associated with Hurricane Andrew that struck south Florida in the early 1990s, experts have developed better and more sophisticated hurricane models that predict the probable maximum loss that would occur in the event of a catastrophic hurricane striking land. With the availability of more accurate topographic information and experience from recent hurricanes in Florida in 2005, the models are predicting greater potential losses across the eastern seaboard. The Cape Cod and Islands area is situated in a vulnerable position geographically. Although most hurricanes strike in the Caribbean and Southeastern United States, if a hurricane does proceed beyond Cape Hatteras in North Carolina, and strikes land, based on historical records, it is much more likely to strike New England than the Mid-Atlantic States. There is also the likelihood that if it strikes the Cape Cod and Islands area the storm will stall off coast, as do many winter Northeasters, prolonging the incident and causing more catastrophic damage. In addition, the development of expensive homes along the shore in the Cape Cod and Islands area, the presence of many trees in that area rooted in relatively sandy soil, and the difficulty in transporting materials to repair damaged property, has produced a situation in which possible losses in the Cape Cod and Islands area could be tremendous in the instance of a category 4 or 5 hurricane.

    Despite the possibility of enormous losses, many residents are unaware of the real risk of such a storm. While forecasters predict that locales such as Florida should prepare for a category 4 or 5 storm at least once per decade, they predict, based on historical patterns, that Massachusetts may see such a storm only once per century. While many seniors recall the fury of the Hurricane of 1938 and the destruction in eastern New England, it is a faded memory for most New Englanders. Many cities and towns have therefore not taken the precautions that could reduce their exposure to the so-called “storm of the century”. It is in this environment, in spite of recent newsworthy losses in New Orleans and Port Arthur, Louisiana from Hurricanes Katrina and Rita, that many residents of the Cape Cod and Islands area are unaware of the potential risk of hurricane damage.

    Although policyholders may not fully understand their exposure, homeowners insurance companies have been forced to recognize these risks, because the advent of the new hurricane models have predicted substantially greater potential costs in the Cape Cod and the Island areas than formerly contemplated. In order to reduce their potential exposures, these homeowners insurance companies need to purchase reinsurance from private reinsurers. They have found that they need to buy more and more expensive reinsurance in order to maintain their financial strength ratings. Insurance companies can either pass their increased costs along to their policyholders or decide to reduce the number of covered exposures.

    As noted above, the following companies notified the Division of Insurance during 2005 that they would nonrenew Cape Cod homeowners policies citing their concerns about increased hurricane exposure in coastal areas:

    Patrons Mutual 1,400
    Preferred Mutual 600
    Vermont Mutual 5,000
    Hingham Mutual 8,000
    Quincy Mutual 7,000
    National Grange (NGM) 2,000

    There are no state laws that require homeowners insurance carriers to offer coverage in any area or to continue to cover properties following a renewal date. Instead companies are only required to provide 45 day advance notification to policyholders so that they may secure other coverage either through the voluntary market or the FAIR Plan. As a short-term solution, most of the nonrenewed policyholders found replacement coverage from the Massachusetts Property Insurance Underwriting Association, also known as the MPIUA or the FAIR Plan.

    In Massachusetts, the FAIR Plan is considered the insurer of last resort, since it will cover most properties that are not picked up by other homeowners insurance carriers. Coverage available through the FAIR plan is, generally, identical to what is available in the voluntary market, and the rates charged by the FAIR Plan have been statutorily constrained. The result of this has been that the Plan is competitive with the voluntary market. Within the past year, mostly due to the policy nonrenewals along with its competitive coverage and rates, the FAIR Plan has doubled its Cape Cod and Islands exposures. Although this increase in FAIR Plan writings would seem not to affect policyholders, it does concern homeowners insurance companies that make up the Association. If the FAIR Plan has a fiscal year underwriting loss, all other homeowners carriers will be assessed for the FAIR Plan losses; any such assessments would be ultimately passed along to insureds in the form of rate increases.

    Click here to read the entire article.


    © 2013 Citizens for Homeowners Insurance Reform