Cape Cod homeowners who kept their policies even after some major insurance companies pulled out of the region are now facing rate hikes of as much as 200 percent from insurers still serving the area.
At least four remaining insurers are in the process of increasing premiums. The Patrons Group, Quincy Mutual Fire Insurance Co., The Norfolk & Dedham Group and AIG are among those companies raising rates, according to local agents.
Some rate increases took effect recently, and others will be implemented in coming weeks.
Rates are going up by as much as 200 percent for The Patrons Group; 70 percent for Quincy Mutual; and 66 percent for AIG Private Client Group, one of a few companies that still insures Cape homes with a replacement cost of more than $1 million, according to a report published Friday in The Cape Cod Times.
Norfolk & Dedham, which has about 4,000 Cape and Islands policies, is increasing its premiums by “a couple hundred dollars per policy,” company president Tim Hegarty said.
The rate increases are coming at about the same time that NGM Insurance Co., also known as National Grange, is beginning to notify roughly 2,300 Cape and Islands homeowners it will drop their policies.
The Florida-based company is the latest insurer to withdraw from the region over the past two years. Other companies have kept existing policies but have stopped taking new Cape customers.
The changes have forced tens of thousands of Cape homeowners into the Massachusetts FAIR Plan, the state’s often more steeply priced insurer of last resort. The FAIR Plan has swelled into the region’s largest insurer, now covering 43,000 properties, or about a third of the market. Six years ago, the FAIR Plan had about 6,000 Cape policies.
Revised hurricane projections show potential for massive damage on the Cape. Companies are raising rates to cover the increasing cost of reinsurance, which helps insurers pay claims in large-scale disasters.
“This spring, reinsurance costs have gone up dramatically, more than we expected them to go up,” Hegarty said.
Patrons Group, based in Connecticut, is passing along rate increases in an effort to stay on the Cape, President Bill Siclari said. “I’m not making any money from this. Really,” he said.
Patrons Group insures about 1,500 Cape properties and about 5,500 in other coastal areas of Massachusetts.
The FAIR Plan is also expected to increase premiums in the coming weeks. The organization that runs the plan has requested rate increases averaging about 25 percent for the Cape, which may be approved later this month. The average FAIR Plan annual premium on the Cape now costs about $1,300.
After raising premiums by as much as 70 percent, Quincy Mutual will be “kind of in the middle of the pack” for rates, Executive Vice President Kevin Meskell said. Quincy Mutual is also dropping about 1,500 of its 6,000 Cape policies.
Customers will likely continue to face higher rates, agents say. “Typically, we say there’s a light at the end of the tunnel. I don’t know where the tunnel ends,” Silvia said.
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