The Massachusetts Division of Insurance coverage not too long ago launched its 2023 Annual Residence Insurance coverage Report, offering a complete retrospective of what proved to be a pivotal 12 months for the Commonwealth’s insurance coverage panorama. This information confirms lots of the market tendencies we’ve noticed materializing over the previous two years for the Massachusetts Property and Casualty area. This text will spotlight the specifics of this report and what the report reveals in regards to the latest householders’ insurance coverage market in Massachusetts. Please word all graphs and charts are reprinted from the Report, courtesy of the Massachusetts Division of Insurance.
Market Composition: Regional Carriers Keep Robust Presence
Massachusetts householders collectively paid roughly $3.4 billion in dwelling insurance coverage premiums throughout 2023, representing a considerable 17.9% enhance from 2022 ranges. This premium development occurred regardless of a slight lower in whole insurance policies (down 0.33% or 7,041 insurance policies) – with house owners’ insurance policies rising by 19,294 whereas tenant and condominium insurance policies decreased by 26,335.
The market remained characterised by a powerful regional service presence in 2023. MAPFRE Insurance coverage Group (father or mother of Commerce Insurance coverage) maintained the most important market share at 12.5% of the voluntary market. The subsequent largest carriers included Liberty Mutual (9.2%), Security Group (6.5%), and the Andover Group (6.5%).
Among the many prime 10 dwelling insurance coverage teams, solely 5 supplied protection nationally (Vacationers, Liberty Mutual, Chubb, Amica, and USAA), whereas the remaining leaders had been regional firms centered totally on the Northeast. The highest 25 insurers collectively accounted for 91.7% of the non-FAIR-Plan Massachusetts market, whereas the remaining 44 teams and 4 particular person firms wrote 7.8% of the market.
FAIR Plan: Enrollment Decreases, Monetary Efficiency Improves
The Massachusetts FAIR Plan, serving because the residual market since 1968, confirmed indicators of stabilization in 2023. The Plan’s coverage depend decreased by 3,197 insurance policies between fiscal years 2022 and 2023, representing 8.3% of written premium out there – a big enchancment from its peak market share of 16.1% in 2007.
Regional disparities in FAIR Plan reliance remained pronounced. Whereas the FAIR Plan wrote below 10% of insurance policies in most counties, it nonetheless offered 33.0% of dwelling insurance coverage insurance policies within the Cape and Islands area (Barnstable, Dukes, and Nantucket counties).
Financially, the FAIR Plan posted an underwriting lack of $129 per coverage in fiscal 12 months 2023, an enchancment from the $177 per coverage loss in 2022. It’s price noting that the FAIR Plan had not filed to revise its charges since 2013 when it requested a 6.8% enhance that was in the end disapproved in 2014.
Claims Exercise: Important Will increase in Frequency and Severity
Claims exercise elevated dramatically in 2023, with insureds submitting 86,330 claims – a putting 67.6% enhance from 2022. Eight catastrophic occasions resulted in roughly $892.3 million in property losses through the 12 months, in comparison with $208.3 million of disaster losses in 2022.
Water injury and freezing (non-flood associated) accounted for almost all (54.0%) of whole claims submitted. Nonetheless, when inspecting the greenback worth of claims:
- Fireplace, lightning, and removing: 29.0% of whole losses (down from 39.2% in 2022)
- Non-flood water injury and freezing: 46.5% of losses (up from 40.3% in 2022)
- Wind and hail: 12.2% of losses (up from 7.4% in 2022)
- Legal responsibility and medical funds: 3.9% of losses (down from 4.6% in 2022)
- Theft: 0.5% of losses (down from 0.7% in 2022)
- All different: 8.0% of losses (up from 7.8% in 2022)
The typical declare measurement assorted considerably by reason for loss. Fireplace claims averaged $63,155 (down from $103,864 in 2022), wind claims averaged $11,549 (up from $10,282 in 2022), and water injury claims averaged $16,206 (down from $18,885 in 2022).
Loss Ratios and Monetary Efficiency
The general loss ratio for the market was 51.2% in 2023, up from 42.2% in 2022. By coverage type:
- Conventional householders insurance policies: 51.3% loss ratio
- Condominium protection: 60.4% loss ratio
- Tenant protection: 27.5% loss ratio
The adjusted mixed ratio (which incorporates bills and dividends) elevated to 86.1% in 2023 from 77.9% in 2022. The expense ratio part remained comparatively secure at 31.4% (in comparison with 32.0% in 2022), whereas mutual firm dividends to policyholders remained constant at 0.5%.
The Adjusted Mixed Ratio Chart from the 2023 Annual Owners Report
Coastal and City Market Dynamics
The DOI continued monitoring coverage availability in “designated” zip codes (both coastal and urban areas) that have historically had availability concerns. In 2023, the highest 25 firms and the FAIR Plan reported:
- 582,200 insurance policies in power in city and coastal areas as of December 31, 2023 (381,426 in city areas, 200,465 in coastal areas)
- 95,847 insurance policies canceled (78,305 by insurance coverage firms, 17,542 by FAIR Plan)
- 72,919 cancellations in city areas and 22,928 in coastal areas
- 65,011 cancellations had been policyholder-initiated; 30,836 had been insurer-initiated
Of the insurer-initiated cancellations:
- 3,447 occurred inside the first 60 days of protection
- 25,144 had been because of nonpayment
- 2,245 had been for different causes permitted by legislation
Relating to nonrenewals, there have been 9,248 insurance policies nonrenewed in designated zip codes (7,526 by the highest 25 firms, 1,722 by the FAIR Plan). Three firms – Heritage Insurance coverage Holdings Group, American Worldwide Group, and Barnstable Group – had the best nonrenewal percentages in 2023.
Claims Historical past and Nonrenewal Correlation
The report reveals a transparent correlation between claims historical past and nonrenewal selections. Of the 456,219 city or coastal insurance policies renewed by the highest 25 firms, there have been roughly 27,918 claims filed (61 claims per 1,000 insurance policies) with a median declare measurement of $13,330.
In distinction, the 7,069 nonrenewed insurance policies had 1,832 claims (259 claims per 1,000 insurance policies) with a median declare measurement of $22,121.
When evaluating city and coastal areas:
- City renewed insurance policies: 55 claims per 1,000 insurance policies, common declare measurement $12,669
- City nonrenewed insurance policies: 186 claims per 1,000 insurance policies, common declare measurement $31,404
- Coastal renewed insurance policies: 77 claims per 1,000 insurance policies, common declare measurement $14,477
- Coastal nonrenewed insurance policies: 351 claims per 1,000 insurance policies, common declare measurement $16,000
Regardless of this correlation, the overwhelming majority of policyholders with claims histories had been nonetheless renewed – 96.8% in city areas and 91.9% in coastal areas.
Wind Deductibles: Prevalent in Coastal Areas
Wind deductibles remained a outstanding characteristic in 2023, notably in coastal areas. Of all policyholders in coastal areas, 60.0% had obligatory wind deductibles, in comparison with simply 19.9% in city areas. Total, 33.6% of policyholders in coastal or city areas coated by the highest 25 firms or the FAIR Plan had a compulsory wind deductible.
All however six of the highest 25 firms reported utilizing obligatory wind deductibles, with deductibles reaching as much as 5% of dwelling protection worth within the coastal elements of Bristol, Plymouth, Barnstable, Dukes, and Nantucket counties.
The DOI continued encouraging insurers to permit mitigation measures to scale back or get rid of these deductibles, with some firms establishing clear packages for mitigation credit.
Local weather Mitigation Efforts
The business’s give attention to local weather danger mitigation gained important traction in 2023. The DOI surveyed the highest 25 insurers and the FAIR Plan on local weather resilience initiatives, discovering:
- 18 firms supplied premium credit or decreased charges for sure loss mitigation measures
- Six decreased or eradicated wind deductibles for mitigation options like hurricane shutters
- Eight insurers reported that contemplating policyholder mitigation measures elevated their capability to put in writing householders insurance coverage in Massachusetts
- 14 firms reported utilizing community-level resilience information from sources like business disaster fashions and ISO’s Constructing Code Effectiveness Grading (BCEG)
- One insurer offered premium credit for LEED (Management in Vitality and Environmental Design) licensed houses
The NAIC Local weather and Resiliency Process Power made important progress in 2023, together with:
- Adoption of a revised Local weather Threat Disclosure Survey aligned with worldwide requirements
- Updates to the Threat-Primarily based Capital components to incorporate particular expenses for hurricane, earthquake, and wildfire dangers
- Creation of a Disaster Modeling Heart of Excellence to higher perceive how local weather danger is included into fashions
Flood Insurance coverage: Protection Hole Persists
Regardless of rising flood dangers, flood insurance coverage take-up charges remained low in 2023. FEMA reported 54,997 flood insurance policies in Massachusetts in 2023, a rise of 6.2% from 51,805 in 2022. Nonetheless, this represented solely a small fraction of insured properties:
- Barnstable, Dukes, and Nantucket counties: 8.9% of houses had flood insurance coverage
- Plymouth County: 4.9% of houses had flood insurance coverage
- Essex County: 3.5% of houses had flood insurance coverage
- Suffolk County: 3.4% of houses had flood insurance coverage
- All different counties: below 2.5% of houses had flood insurance coverage
FEMA’s Threat Score 2.0, efficient for brand spanking new insurance policies in October 2021 and renewal insurance policies in April 2022, was totally operational all through 2023. This technique included extra flood danger variables, together with flood frequency, a number of flood sorts, distance to water sources, and property traits.
The non-public flood insurance coverage market confirmed development, with non-public flood protection rising to $8,705,496 in direct written premium on 4,558 residential flood insurance policies (year-end 2023), plus $1,792,571 in direct written premium on 2,307 non-public residential endorsements.
Premium Developments by Coverage Kind
Common premiums elevated throughout all coverage sorts in 2023:
- Conventional householders: $2,054 (up from $1,818 in 2022)
- Condominium: $530 (up from $473 in 2022)
- Tenant: $181 (up from $176 in 2022)
Whole premium by coverage sort:
- Conventional householders: $3.26 billion (up from $2.76 billion in 2022)
- Condominium: $74.3 million (up from $69.4 million in 2022)
- Tenant: $76.6 million (up from $160.4 million in 2022)
Market Distribution by County
The report supplies detailed insights into coverage distribution throughout Massachusetts counties:
- Middlesex County had the best variety of dwelling insurance coverage insurance policies in power (485,634), adopted by Worcester (259,896), Essex (240,080), and Norfolk (227,438) counties
- Between 2022 and 2023, the variety of dwelling insurance coverage insurance policies remained pretty constant in most counties
- The voluntary market maintained excessive market shares in most counties: 97.9% in Middlesex, 97.0% in Worcester, 94.1% in Essex, and 97.0% in Norfolk.
- The FAIR Plan’s presence assorted considerably by area, from simply 2.1% in Middlesex County to 33.0% in Barnstable, Dukes, and Nantucket counties.
FAIR Plan Clearinghouse Initiative
The report mentions the FAIR Plan’s Clearinghouse initiative, applied in 2018 to assist insurance coverage firms work with producers to present extra FAIR Plan policyholders alternatives to seek out protection within the voluntary market. This depopulation initiative permits collaborating carriers to entry non-personally identifiable details about FAIR Plan insurance policies to determine potential voluntary market alternatives.
Wanting Again from 2025
Wanting again at 2023 from our present perspective 2025, we are able to now see that 12 months represented a big transition level for the Massachusetts dwelling insurance coverage market. The substantial enhance in disaster losses, rising declare severity, and rising emphasis on local weather danger mitigation foreshadowed lots of the market changes which have occurred since then.
The info on this report supplies worthwhile context for understanding the present market circumstances and presents a benchmark towards which to measure the next evolution of our distinctive Massachusetts insurance coverage panorama.
For insurance coverage professionals serving Massachusetts property house owners, this historic perspective presents worthwhile insights into the underlying components which have formed at present’s market realities—and should present clues to the challenges and alternatives that lie forward.
Free Copy of the Full Report
To your personal copy of the report, Click on on this hyperlink to the Division of Insurance coverage web site: “2023 Annual Homeowners Report.“
