Report: Home insurance rates yield high profits, get little scrutiny

Press Release

A report by the State Senate lambasts the process of setting Massachusetts home insurance rates and calls for immediate changes to state law to protect residents.

In 2015 the Massachusetts Division of Insurance considered, and granted, requests by several of the state’s biggest insurers to raise their rates on homeowners coverage by as much as 9%. Yet neither the public, nor state legislators, nor insurance experts in the state Attorney General’s office, were informed of the requests.

Later, when staff to the Attorney General were able to analyze industry documents filed in secret with the Division, they deemed two of the largest increases unlawfully excessive.  Regardless, the Division had the last word.  To date, both rates remain in effect.

Commenting on the state’s practice of secret rate setting for home insurance, the report, by the Senate Committee on Post Audit & Oversight, states, “In a time of profound public mistrust of both governmental and financial elites, the Committee finds no justification for a regulatory process marked by a no-exceptions rejection of public notice, informational access, and consumer input.”

Sen. Mike Barrett (D-Lexington), Chair of the Committee, emphasized there’s an immediate solution pending before the Legislature.  An amendment he offered to the Senate’s version of the public records bill would declare industry requests for home insurance rate increases to be “public records” as soon as they are filed, affording the Attorney General’s office and other consumer advocates a look at rate increases before they become effective.

The proposal now sits in a legislative Conference Committee.  If the House goes along with the Senate provision, Barrett says, it will be a major win for homeowners.