The bill for the winter’s ice dams, cracked roofs, and water-logged walls is coming due as insurers raise premiums on homeowner policies by some of the largest amounts in years, to recoup what they paid out for repairs.
The state’s biggest insurance companies have received approval from the Massachusetts Division of Insurance to increase their overall rates by about 9 percent, a departure from the modest increases that homeowners have experienced in the past. More companies will probably boost their rates, too, industry specialists said.
The increases could translate to an additional $100 on the average Massachusetts premium of $1,150.
The state’s largest home insurer, Mapfre USA Corp., previously known as Commerce Insurance, will increase rates by 8.9 percent, on average, beginning Aug. 1. Last year, the company, which insures more than 214,000 homeowners in the state, increased its rates by 2.3 percent.
“The unprecedented weather-related events and claims activity this winter have negatively impacted the insurance industry,” Daniel McCabe, Mapfre’s vice president for New England, wrote in a recent bulletin to independent insurance agents explaining the rate increase. “Profitably writing property insurance in New England requires insurance carriers to prudently price polices [and] accurately underwrite exposures.”
Boston-based Safety Insurance Co., which covers nearly 150,000 homeowners in Massachusetts, plans to raise premiums by 9.1 percent starting in December. Bunker Hill Insurance Co. of Boston, a subsidiary of Plymouth Rock Co., will raise its premiums by an average of 7.8 percent, starting this week. Bunker Hill insures about 35,000 homeowners in the state.
Home insurance premiums last experienced such increases after severe snowstorms, tornadoes, and Tropical Storm Irene hit the state in 2011. In 2012, when some insurers raised rates by as much as 20 percent, Mapfre, a unit of the Spanish company Mapfre SA, and Safety increased rates by about 8 percent, less than this year.
Rates will probably increase for a few years — and not just for homeowners. Auto insurance rates are rising, too, as slick roads and massive snow banks that obscured vision led to more accidents.
Some insurers have raised average rates by as much as 6 percent for drivers.
Ray Gallant, the president of Gallant Insurance Agency Inc. in Acton, said he has warned customers that their premiums are likely to jump.
“It’s very difficult on the consumer, very difficult on the agent, and very difficult on the company,” Gallant said. “It is in response to the biblical losses that they [insurers] received.”
Gallant said his company logged as many as 75 calls a day from customers reporting damage during the worst of the winter and is still dealing with claims from the storms.
Insurers paid an average of $10,000 for each claim, he said, many of them tied to ice dams, which formed on roofs as the snow melted and refroze, preventing proper drainage. That triggered a cascade of other water-related problems that damaged walls, ceilings, and roofs.
Boston was socked by 110.6 inches of snow over the winter, breaking the 1995 record by 3 inches. It will have lasting ramifications on insurance, Gallant said.
Insurance companies consider several years of weather trends, along with the rising costs of building materials and home repairs, in determining rates, said Chris Olie, chairman of Bunker Hill Insurance.
“Needless to say, Mother Nature plays a big role in homeowners’ losses,” he said. “In our current situation, the winter storms from 2011 and 2015, along with all the tornadoes and tropical storms that have occurred in the interim, are factors in our analysis of rate need.”
Insurance companies also are asking at renewal if customers are fixing problems that led to the claims, such as ensuring that roofs are properly ventilated and attics are insulated, which helps prevent ice dams, independent agents said. Companies have rejected some customers who have a repeated history of similar claims, Gallant said.
Frank O’Brien, a spokesman for Property Casualty Insurers of America, an insurance trade organization, said the increases should come as no surprise.
“Everybody knows we had a wicked bad winter,” he said. “For a lot of companies, if it wasn’t the worst winter a company had experienced, it was certainly among the worst.”
Safety Insurance Co., for example, estimated the damage from snow and ice dams cost it $82 million, compared to $20 million in 2011, according to documents filed with the Division of Insurance. The company for the first time was forced to submit claims to its own insurance plan to cover its losses.
Most insurers buy policies from other companies, known as reinsurers, to protect themselves from losses if claims are excessive.
Officials from Safety did not return calls for comment.
Consumers hit by higher premiums should shop around, but it may not be immediately obvious which companies are the cheapest, since insurers implement increases at different times of the year, said Tom Skelly, with Deland, Gibson Insurance Associates Inc., an independent agency in Wellesley Hills.
Still, insurance companies, aware that consumers may go elsewhere if premiums rise too high, try to keep prices in line with those at competitors, said Olie of Bunker Hill Insurance.
There were 76 licensed insurance companies in Massachusetts writing about 1.9 million policies in 2013, according to the most recent data from the state.
“We recognize that homeowners insurance is a very competitive market with lots of choices for consumers,” he said. “So we are always cognizant of maintaining an adequate, but competitive rate level.”Deirdre Fernandes
can be reached at firstname.lastname@example.org. Follow her on Twitter @fernandesglobe.