Lawmaker wants officials to reconsider insurance rate hikes

Insurers sustained $1 billion in losses in Massachusetts last winter, according to industry estimates, much of that from ice dams, roof damage, and interior water damage.John Tlumacki/Globe Staff

The chairman of a powerful state Senate committee on Wednesday called on the Division of Insurance to reconsider the substantial rate increases granted to two of the state's largest home insurance companies and open hearings on whether increases are justified.

In a letter to Insurance Commissioner Daniel Judson, Senator Michael J. Barrett cited arecent analysis by Attorney General Maura Healey that found the rate increases of about 9 percent recently implemented by Mapfre USA Corp. and Safety Insurance Co. were excessive. Healey's analysis said Mapfre should have lowered rates, based on its losses and profits over the years, while Safety's increase should not have exceeded 3 percent.

Barrett, chairman of the Senate's Post Audit and Oversight Committee, said the rates deserve further scrutiny and public hearings, something consumers have urged, but the Division of Insurance has rarely held.

"We need a formal, serious public consideration of the new rates," said Barrett, a Lexington Democrat. "This is a question now of putting at ease legitimate concerns that something went off the rails in this particular case."

Chris Goetcheus, a spokesman for the Division of Insurance, defended the agency's rate process.

"The Division's rate filing reviews are conducted with the best interest of both the consumers and the marketplace in mind to ensure that rates are not excessive, unfairly discriminatory, or inadequate," Goetcheus said in a statement.

The agency is charged with both ensuring that rates are fair to consumers and companies receive sufficient rates to keep them solvent and able pay future claims.

The division is holding meetings around the state to hear from consumers and insurance companies about homeowners insurance and the rate process. Geotcheus said that Judson "looks forward to engaging" with Barrett on this issue.

Mapfre and Safety each requested rates far larger than they have in recent years after 110.6 inches of snow creamed the Boston area last winter. Insurers sustained $1 billion in losses in Massachusetts, according to industry estimates, much of that from ice dams, roof damage, and interior water damage.

The insurers also cited losses from other catastrophic weather in recent years, including tornadoes and a fall snowstorm. Their rate increases amount to about $100 on the average state premium of $1,150.

But Healey's analysis of the documents Mapfre and Safety provided regulators to justify higher premiums found that the insurers put too much emphasis on recent storms, ignoring longer-term trends that are traditionally used to calculate rates. The companies also requested rates to meet higher profit targets, according to Healey's analysis.

Both Mapfre and Safety have declined to comment about Healey's findings.

A spokeswoman for Healey declined to comment about Barrett's letter.

A formal hearing would mean that the insurance companies and their experts could be questioned by representatives from the attorney general's office about how they justify the rates. The attorney general would also have to detail reasons for objecting to an increase.