Massachusetts AG calls homeowners insurance rates excessive
In a recent letter to the state's Rating Board, Massachusetts Attorney General Martha Coakley called for a review of the hurricane models used by homeowners insurance companies operating in the state.
In the letter, she said that insurers' use of either "untested or discredited hurricane models" is increasing consumers' homeowners insurance rates without justification.
"Hurricane models have a significant impact on the premiums paid by all Massachusetts homeowners who could have paid millions in excessive rates as a result," said Coakley. "All insurers should be required to demonstrate that these models produce accurate estimates that are appropriate for Massachusetts."
Coakley says that insurance rates increased $2.2 billion between 2004 and 2010, with nearly a quarter of that potentially being overcharges, since the region didn't receive any hurricanes in that period. Hurricane Irene was only a tropical storm when it hit the state.
Industry groups responded to Coakley's claims. The National Association of Mutual Insurance Companies said that the letter showed "a fundamental lack of understanding" about the use of catastrophe models in determining homeowners insurance rates, Insurance Journal reports.
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