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4th Look: 2017 Financial Results, Claims, Loss Ratios, Cancellations & NonRenewals For The Massachusetts Home Insurance Marketplace

A look at the home insurance marketplace in Massachusetts

The final article in a four-part take a look at the Commissioner’s Annual Report on House Insurance coverage in Massachusetts

Since 1996, the Division has been required to supply a House Insurance coverage Report pursuant to M.G.L. c. 175 Sec. 4A & 4B.

In contrast to personal passenger auto insurance in Massachusetts, there are not any legal guidelines requiring that a property owner have residence insurance coverage. With that stated, the purpose of the Commissioner’s Annual Report is to shed mild in addition to educate shoppers with respect to the composition and well being of the overall residence insurance market in Massachusetts. To be able to make the general report more easily digestible, Company Checklists has damaged down its analysis right into a four-part collection.

Whereas our First Look article was an summary of all the report and the current state of the house insurance coverage market, the Second Look targeted more on the status of the Massachusetts FAIR Plan and the way its market share continues to lower. The Third Look took a take a look at residence insurance insurance policies by county and different fascinating statistics associated to that matter.

This remaining article deals with the previously uncovered sections of the Report together with Monetary Outcomes, Cancellations and Non-Renewals, and a take a look at strategies of setting House Insurance Limits. This can be a distillation of the report reproducing solely the key findings and graphs. To assessment all the small print and knowledge included in the report, please seek advice from the complete official report on the Massachusetts Division of Insurance coverage website.

A snapshot of the over all state of the Massachusetts house insurance marketplace from this yr’s report

This yr’s report, which focuses on knowledge from 2017, cites a three.12% improve, or 60,176 policies, in the general number of house insurance insurance policies in the Commonwealth between 2016 and 2017. This can be a marked improve from the yr before when the Division famous that there was solely a .04% improve in policies from 2015 to 2016.

In Massachusetts, the house insurance market covers non-commercial property, which includes risks of injury to structural and private property, in addition to for dangers involving personal property claims.

A take a look at the full number of house insurance insurance policies in pressure in 2017

Photograph source: DOI

In 2017, there have been roughly 1,987,168 residence insurance policies in pressure in the Commonwealth. Of that quantity:

  • 24,178 of these insurance policies have been Condominium house insurance policies;
  • 1,449,876 of these insurance policies have been Conventional Home-owner’s insurance policies; and
  • 296,115 of these policies have been Rental insurance coverage or Tenant policies.

On an fascinating aspect observe, in evaluating the above numbers with these reported in each 2015 and 2016, Rental or Tenant insurance policies confirmed the most important improve in numbers, whereas both conventional and condominium barely decreased in quantity throughout the identical time period.

Complete and Average premiums by protection for 2017 for Home-owner, Tenant and Condominium insurance policies

Key information for from the newest knowledge regarding Complete Premium by Sort of Protection:

  • Massachusetts shoppers bought approximately $2.four billion in householders insurance coverage in 2017
  • This is an increase of 2.9% greater than the full amount of premium by coverage reported for 2016.
  • This reflects an increase of in conventional householders insurance coverage premium from 2016-2017 of roughly $62.eight million.
  • Conventional home-owner’s insurance coverage premium continues to symbolize the lion’s share of complete householders insurance premium, being 92.8% of all premium.

Home Insurance Policies Statistics in Massachusetts

Key details for from the newest knowledge concerning Complete Average Premium by Sort of Coverage:

  • Common premiums elevated in two of the three kinds of house insurance coverage coverage in Massachusetts this yr.
  • Traditional house insurance coverage common premiums increased by $50 from 2016 to 2017, if evaluating the typical premiums from 2015 to 2017, common premiums increased by $132.
  • Average premiums for condominiums additionally increased $2 from 2016 to 2017 and by $15 from 2015 to 2017.
  • Whereas Tenant average premiums increased from 2015 to 2016, they decreased from 2016 to 2017 by $3. As such from 2015 to 2017 the elevated was $11.

Home Insurance Policies Statistics in Massachusetts

Claim numbers, costs and kinds of losses

A evaluate of the Division’s findings with respect to the to previous claims and expense tendencies:

  • In 2017, Massachusetts insureds filed a complete of 61,466 claims with their insurers.
  • Conventional householders’ insurance represents 85% of the whole variety of claims.
  • This represents a 6.1% improve within the variety of claims, or 57,952 extra claims filed than in 2016.
  • Claims involving condominiums additionally saw a slight increased from 2016 to 2017 with 89 more claims filed.
  • This quantity of Condominium claims in 2017, although, stills remains at lower than half of 15,561 claims made in 2015.
  • Tenant claims remain low and saw a decreased from 2016 to 2017 with 142 fewer claims filed in 2017.

Home Insurance Policies Statistics in Massachusetts

As for the info on the typical claims measurement by sort of residence insurance coverage:

  • Declare developments are largely dependent upon the weather occasions that occur in any given yr.
  • For example, 2017 had just one event that could possibly be categorized as a extreme storm.
  • Estimated property losses in Massachusetts for 2017 have been approximately $116.1 million on account of flooding and wind injury.
  • As compared, in 2016 property loss damages totaled $159.four million in 2016.
  • However, the Division says that the entire number of claims filed elevated from 2016 to 2017
  • Average declare measurement, nevertheless, decreased by 10.5% for conventional householders insurance coverage from 2016 to 2017 from $17,578 to $15,735.
  • Average declare measurement for condominiums also decreased by three.6% from the $6,895 to $6,646.
  • Average claims for tenants additionally decreased slightly by zero.3% from $5,239 to $5,221.

Home Insurance Policies Statistics in Massachusetts

Declare Experience Knowledge – Water Nonetheless Trumps All Different Claims by Reason for Loss

To be able to shield future claims in addition to develop loss management packages aimed toward decreasing or stopping future losses, insurers are likely to categorize and monitor submitted claims by certain categories. They are sometimes the next

  • Hearth
  • Wind
  • Water
  • Theft
  • Liability
  • All Other

As outlined within the following graph compiled by the Division, the overwhelming number of claims submitted with respect to householders’ insurance policies proceed to be because of water injury. Right here is the key knowledge for 2017

  • 46.7% of the whole quantity of claims submitted in 2017 have been for water losses referring to non-flood related water injury.
  • 23.zero% of the full quantity of claims have been filed underneath the wind injury category, representing the second largest quantity of claims filed.
  • The third largest category of claims filed concerned All Other.
  • The fourth class with the most important variety of claims was in the Hearth Class.
  • Liability and Theft have been the remaining two categories with smallest variety of claims, with 2,915 and a couple of,463, respectively.

When it comes to the share of losses over the previous three years, solely Wind and Hearth saw an increase if the share of losses as measured in dollars. Water, then again, saw a decreased by also half from its 2015 degree. Theft also saw the small improve, followed by Legal responsibility and All Different.

  • Wind and Hail – 11% of all complete losses in 2017. Up from 6.4% to 11.0% from 2016 to 2017. Common 2017 Wind and Hail claim quantity was $6,865.
  • Non-Flood Water Injury – 37.2% of complete losses in 2017. Down from 45.eight% to 37.2% from 2016 to 2017. Common 2017 Water declare amount was $11,433
  • Hearth – 35.four% of the whole losses claimed in 2017. Up from 34.2% to 35.4% from 2016 to 2017. Average 2017 Hearth claim amount was $74,156.
  • Theft – 1.1% of the whole losses declare in 2017. Down from 1.2% to 1.1% from 2016 to 2017. Average 2017 Theft claim was $three,313.
  • Legal responsibility and Medical Funds – 7.zero% of the full losses claimed in 2017. Up from 5.6% to 7.0% from 2016 to 2017. Average 2017 claim was $24,952.
  • All Other Claims –  8.2% of the whole losses claimed in 2017. Up from 6.eight% to 8.2% from 2016 to 2017. Common 2017 declare was $8,093.

Home Insurance Policies Statistics in Massachusetts

Loss Ratios are at their lowest levels up to now ten years

Because the Division explains in its report, loss ratios are the “usually accepted measure of the underwriting success or failure of property insurance coverage”. As might be seen by the under graph, the 2017 loss ratio is the lowest as compared to the previous decade.

Home Insurance Policies Statistics in Massachusetts

With 2017 logging only one major weather-related occasion as compared to previous years which included two and up to 4, the corresponding loss ratio is lower than in other years, akin to 2011 and 2015. The Division’s next graph outlines the loss ratio by type, with traditional home-owner’s insurance policies claiming a loss ratio of 37.4%, while condominium was 41.7% and tenant loss ratio 21.four%.

Mixed and Adjusted Combined Ratios

The mixed loss ratio makes an attempt to measure the overall loss ratio for all FAIR Plan and insurance coverage company policies. It’s usually accepted that this adjusted ratio is calculated by combining firm expenses and incurred declare costs, then dividing it by earned premium. A decrease mixed ratio sometimes goes hand in hand with increased income for an insurer.

In line with its calculations, 2017 show a slight lower in adjusted combined ratios, because of the absence of main catastrophes in each 2016 and 2017. In consequence, the adjusted mixed ratio was 75.6% for 2017, down from 79.2% in 2016.

The Division notes that its calculations don’t embrace insurer’s reinsurance costs, which may account for as much as as a lot as 25% of a company’s premiums, depending on an individual’s insurers coastal exposures. Additionally omitted are “…reinsurance recoveries, or funds from reinsurers to insurance corporations that partially reimburse the insurance coverage firm for losses paid.”

Home Insurance Policies Statistics in Massachusetts

Cancellations/Non-Renewals

Key knowledge on the variety of Cancellations and Nonrenewals in both Urban and Coastal areas as reported by the top 25 insurance coverage corporations in Massachusetts together with the FAIR Plan.

  • 490,824 policies in drive as reported by the top 25 insurers and FAIR Plan in both city and coastal areas in 2017.
  • A breakdown of that quantity revewals 300,182 urban space policies and 190,642 coastal space insurance policies.
  • Of the 490,824, 369,793 houses have been insured by insurance corporations while 121,031 have been insured beneath the FAIR Plan
  • In 2017, 73,479 insurance policies have been cancelled in city or coastal areas in 2017.
  • Breaking down that cancellation quantity additional,
    • 52,845 insurance policies have been cancelled in urban areas
    • 20,634 insurance policies have been cancelled in coastal areas
  • Of the full amount 73,479 policies cancelled in 2017
    • 56,077 cancellations have been effected by the top 25 corporations
    • 17,402 cancellations have been FAIR Plan policies

 

Home Insurance Policies Statistics in Massachusetts

The next is a breakdown of which of the Prime 25 House Insurance corporations in Massachusetts has the very best price of NonRenewals in 2017.

Home Insurance Policies Statistics in Massachusetts

Causes for Cancellations and NonRenewals

As a part of its research into this report, the Division requested insurers and the FAIR plan the quantity of cancellations and nonrenewals that stemmed insurer versus from the policyholder-initiated. As well as, it queried insurers whether or not these renewals have been made in the course of the first 60 days of a coverage, sometimes when an insurer might nonrenew with no particular cause versus nonpayment or premium or other causes as permitted by regulation to do so after the first 60 day period. The following graph charts these outcomes:

  • In line with the info, four,860 insurer-initiated insurance policies have been nonrenewed in the urban and coastal designated zip codes in 2017,
    38 with 471 of the nonrenewals ensuing from insurer withdrawal from sure geographic areas.
  • The FAIR Plan reported that 4,656 insurance policies were not renewed in compliance to what it’s “…permitted inside its Plan of Operations, including properties whose value
    exceeds the FAIR Plan’s $1,000,000 cap.”

Home Insurance Policies Statistics in Massachusetts

Methods to acquire our past articles on or further information about this report…

This four-part abstract of the Division of Insurance coverage’s report on home-owner insurance to the Massachusetts Legislature coated a number of the highlights from the report we thought may be of interest to our readers.

Listed here are the hyperlinks to the first three articles:

  1. 1st Look – The Latest Annual Residence Insurance coverage Report for Massachusetts For 2017 Has Been Issued
  2. Second Look: MA FAIR Plan Continues To Lose Market Share
  3. Third Look – Ranking of Massachusetts Residence Insurance Policies By County

The report additionally has further info that we have now not included that was of maybe lesser interest and in addition the report references the underlying knowledge that the Division utilized in compiling the report as a statistical complement. Whereas the Report and its Statistical Supplement could be discovered on the Division’s website online, be happy to contact Agency Checklists, if you need to acquire a replica of the report.