More Massachusetts homeowners are getting hit with higher insurance bills as several smaller companies follow industry leaders in raising rates after last year’s damaging winter storms.
About a dozen home insurance companies have increased average rates between 4 and 10 percent in recent weeks, or will do so soon, according to filings with the state Division of Insurance. This follows increases by two of the state’s largest insurers, Mapfre USA Corp. and Safety Insurance Co., which each boosted homeowner premiums by an average of about 9 percent last year.
Average rates for the 154,000 customers of Quincy-based Arbella Insurance Group, the state’s third-largest home insurer, climbed 8.7 percent Jan. 1. In about two weeks, customers renewing their policies with the Andover Cos., which owns Merrimack Mutual Fire Insurance Co. and Cambridge Mutual Fire Insurance Co., will see premiums rise by an average of almost 10 percent.
Merrimack and Cambridge, which together insure nearly 70,000 homeowners, also are boosting their minimum deductible to $500 from $250, meaning customers will have to pay at least $500 out-of-pocket before their insurance kicks in.
On March 1, the Rhode Island insurer Amica Mutual Insurance Co. will raise rates on its 65,500 Massachusetts customers by an average of 5 percent. Amica, Andover, and Arbella declined to comment.
State Senator Michael J. Barrett, chairman of the Senate’s Post Audit and Oversight Committee, said he isn’t surprised that other companies have followed Mapfre and Safety, given a regulatory system that allows little public scrutiny and comment on rate proposals. Barrett has called on the insurance division to reconsider the increases granted Mapfre and Safety and open hearings on whether they are justified.
“My concern is that we’re in an era of erratic weather; we’re going to be seeing sizable rate requests for a number of years,” Barrett said. “They compound very quickly; they hit homeowners hard.”
Insurance industry officials and analysts say the severe winter in 2015 and other catastrophic weather events of recent years, including tornadoes and an October snowstorm, triggered the need for higher rates. Last winter’s snowfall broke records and caused expensive damage to roofs and walls, requiring insurers to pay more than $1 billion in claims in Massachusetts alone.
Arbella, for example, reported $168 million in losses in 2015, nearly triple the losses from the year before and the highest in two decades.
But the rate increases have become controversial, sparking calls from lawmakers and other state officials for greater scrutiny of the Division of Insurance, which regulates the industry and reviews rate requests. Consumer groups want regulators to hold formal hearings on the rate increases. The Massachusetts Legislature is considering proposals that would require the Division of Insurance to make rate requests public — before they are approved.
In a recent analysis of rate filings by Mapfre and Safety, Attorney General Maura Healey found they took unfair advantage of recent weather events to win excessive and unwarranted increases. Healey said Mapfre and Safety put too much emphasis on the effects of recent storms, ignoring longer-term trends traditionally used to calculate rates. The companies also raised rates to meet higher profit targets, Healey said.
Neither Commerce nor Safety commented on the findings.
The Division of Insurance is charged with ensuring that rates are both fair to consumers and sufficient to keep companies solvent and able pay future claims. Agency leaders say their reviews often result in companies reducing initial rate requests. Andover Cos., for example, first sought average increases of nearly 12 percent, but lowered them below 10 percent after discussions with regulators, according to filings.
Chris Goetcheus, a spokesman for the Division of Insurance, said the agency is reviewing Barrett’s request for formal hearings but, in the meantime, has held meetings around the state to hear from consumers and companies.Deirdre Fernandes can be reached at email@example.com. Follow her on Twitter @fernandesglobe.