The Massachusetts House of Representatives is currently considering a homeowners insurance reform bill that has already been unanimously approved by the state Senate. The proposed law would create a research center at the University of Massachusetts in Lowell “to inspect and approve the predictive models used by many insurance companies to assess the risk of storm damage” and would allow FAIR Plan insurance customers to obtain rebates if the region is not affected by hurricanes for a three year period.
Some critics of the bill question the need for another layer of bureaucracy and regulation. Others have attacked the rebate plan, criticizing the exceptions to the rebate provision and the likely difficulty consumers would face in meeting the rebate requirements. For example, consumers would not receive rebates if the issuance of rebates would result in a net loss for the FAIR Plan for that year or if the Insurance Commissioner decides that the Plan has not purchased enough reinsurance.
Both consumer advocates and industry participants have questioned why the bill does not address prior complaints about the functioning of the FAIR Plan board. Consumer advocates have complained that there is not enough board representation from the coastal region. Industry participants have asserted that a conflict of interest exists in permitting Massachusetts Attorney General Martha Coakley to appoint members to the board because she has legally challenged several insurance companies’ requests for rate increases. The proposed law does not address either issue.
For a full copy of the Senate bill, please click here.