Massachusetts Division of Insurance
Annual Home Insurance Report
For Calendar Year 2018
Gary D. Anderson
Commissioner of Insurance
 Introduction
This report was prepared by the State Rating Bureau staff of the Massachusetts Division
of Insurance (“Division”) (Matthew M. Mancini, State Rating Bureau Director,
Gerald B. Condon, State Rating Bureau Researcher, Caleb E. Huntington, State Rating
Bureau Mathematician, Bashiru Abubakare, State Rating Bureau Actuary / Statistician).
The report is based primarily on responses from companies writing home insurance
policies in Massachusetts and from statistical reporting organizations reflecting the
experience of companies in the home insurance market. Unless otherwise noted in the
report, references to “home insurance” include traditional homeowners insurance as well
as condominium and rental insurance.
The Division makes all appropriate efforts to check the completeness and consistency
of data reported by insurance companies and their statistical agents but does rely on
the insurance companies for the accuracy of all reported information.
Annual Reports
The Division annually produces a home insurance report pursuant to M.G.L. c. 175, §§ 4A
& 4B and has done so since 1996. For the current report, insurers and their statistical agents
were required to provide aggregate 2016, 2017 and 2018 data sorted according to
Massachusetts zip codes and Insurance Services Office, Inc. (“ISO”) territories.
It is important to note that while some of the results in this report apply to all home
insurance policies in the Commonwealth, other results apply to policies written by only the
25 largest Massachusetts home insurance companies, FAIR Plan and/or only to particular
zip codes in the Commonwealth. These particular zip codes are identified as “designated”
zip codes because they are the zip codes that the Commissioner of Insurance
(“Commissioner”) has specified to be included in the report due to historical skepticism
regarding availability of coverage in these areas. The zip codes include both coastal areas
and urban areas. This report provides specific scrutiny in response to such concerns. A list
of the top 25 home insurance companies can be found under footnote 9. The full list of
designated zip codes can be found in Exhibit 8A of the Statistical Supplement to this report.
Many of the statistical tables that were incorporated in previous versions of this report have
been included in a separate Statistical Supplement. The Statistical Supplement can be
found on the Division’s web site at https://www.mass.gov/service-details/the-
commissioners-report-on-home-insurance and is available upon request.
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 TABLE OF CONTENTS
Title Page
Introduction ii
Table of Contents iii
Table of Figures iv
Executive Summary 1
Significant Events 2
Composition of the Massachusetts Market 5
The FAIR Plan
Relative Shares of the Private Insurance Market
Impact of Private Passenger Automobile Insurance Reforms
Coverage Options and Limitations 16
Policy Form Options
Wind Deductibles
Flood Exclusions
Financial Results (M.G.L. c. 175, § 4A) 21
Premiums
Costs
Analysis of Claim Experience
Loss Ratios 27
FAIR Plan Financial Results
Cancellations and Nonrenewals in 2018 (M.G.L. c. 175, § 4B) 34
Urban/Coastal Areas
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 TABLE OF FIGURES
Page Figure
6 Figure 1 Total Policies by Type of Coverage
7 Figure 2 FAIR Plan Policies
8 Figure 3 Market Share Insurance Companies and FAIR Plan
9 Figure 4 Share of 2018 Market (including FAIR Plan)
10 Figure 5 Share of 2018 Market (not including FAIR Plan)
11 Figure 6 2016-2018 Total Home Insurance Policies
12 Figure 7 2018 Total Home Insurance Policies by County
13 Figure 8 2017 and 2018 Total Home Insurance Policies by County
14 Figure 9 Home Insurance Credits for Those with an Auto Insurance Policy
15 Figure 10 Number of Home Policies Receiving Premium Credit for Auto Insurance
16 Figure 11 Average Level of Premium Credit for Those with Auto Insurance
18 Figure 12 FEMA National Flood Insurance Program Report – Massachusetts
19 Figure 13 2017 and 2018 Estimated Percentage of Homes with Flood Insurance
21 Figure 14 Total Premium by Type of Coverage
21 Figure 15 Average Premium by Type of Coverage
22 Figure 16 Total Number of Claims by Type of Coverage
23 Figure 17 Average Claim Size by Type of Coverage
24 Figure 18 2018 Number of Claims by Cause of Loss
25 Figure 19 Percentage of Losses (in Dollars) by Cause of Loss
27 Figure 20 Total Home Insurance Loss Ratios
28 Figure 21 Total Home Insurance Loss Ratios by Form - 2018
29 Figure 22 Calculation of Adjusted Combined Ratios
30 Figure 23 Massachusetts Home Insurance Adjusted Combined Ratios
31 Figure 24 FAIR Plan Underwriting Gain (Loss)
31 Figure 25 FAIR Plan Underwriting Gain (Loss) per Policy
32 Figure 26 FAIR Plan Home Insurance Rate Changes
34 Figure 27A Top 25 Companies in Coastal and Urban Areas - Cancellations/Nonrenewals
34 Figure 27B FAIR Plan in Coastal and Urban Areas - Cancellations/Nonrenewals
35 Figure 28 Top 25 Companies Percentage Nonrenewed in Coastal and Urban Areas
36 Figure 29 Cancellations by Reason in Coastal and Urban Areas
39 Figure 30A Policies with Claims in Urban Areas that were Renewed
39 Figure 30B Policies with Claims in Coastal Areas that were Renewed
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Executive Summary
Among the material presented in this report:
• The total number of home insurance policies increased by 35,443 or 1.8% between 2017 and
2018, after increasing by 3.1% between 2016 and 2017 1.
2,200,000
2016-2018 Total Home Insurance Policies*
2,100,000
2,022,612
1,987,168
2,000,000
1,926,992
1,900,000
1,800,000
1,700,000
1,600,000
1,500,000
2016 2017 2018
*Policies reflect reported house-years. A house-year is defined as one house insured for one year, and is
calculated based on the term of the policy.
• Total enrollment in the FAIR Plan 2 increased by 599 policies in 2018, with the FAIR Plan
writing 10.3% of 2018 home insurance premium.
• For the Cape and Islands market, the FAIR Plan accounted for 38.4% of policies.
• There were five events that were classified as loss catastrophes 3 in 2018, which resulted in
estimated property losses in Massachusetts of approximately $487.8 million.
-A severe winter weather event took place January 3 through January 6, consisting of flood,
freezing, ice, snow and winds and resulted in estimated property losses in Massachusetts of
over $94.5 million.
1The 2017 reported increase is primarily due to one carrier mistakenly under reporting approximately 39,000
condominium and tenant policies prior to 2017.
2 The FAIR Plan is the residual market for homeowners insurance operated by the Massachusetts Property Insurance and
Underwriting Association (“MPIUA”).
3 Property Claims Services, Inc. (“PCS”), a subsidiary of ISO, Inc., defines catastrophes in the United States, Puerto Rico, and the
U.S. Virgin Islands as events that cause $25 million or more in direct insured losses to property and affect a significant number
of policyholders and insurers. PCS has also provided Massachusetts property loss estimates as a result of a catastrophe.
Massachusetts Division of Insurance Annual Home Insurance Report For Calendar Year 2018
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-Two events took place, one on March 1 through March 3 and the other on March 7 through
March 8, consisting of flood, ice, snow and wind. These two events resulted in combined
estimated property losses in Massachusetts of over $298.3 million.
-An event occurred May 12 through May 16 and consisted of flood, hail, tornado and wind
with estimated losses of $4.1 million.
-A catastrophe resulted from a gas line overpressure incident discussed in detail in the
following section. The resulting explosions and fires on September 13 and September 14
resulted in estimated property losses of $90.9 million.
Significant Events
September 13, 2018 Merrimack Valley Gas Line Explosions
and Fires
Explosions and Fires
On the afternoon of September 13, 2018, during maintenance work in Lawrence on a low pressure
gas line, owned and operated by Columbia Gas of Massachusetts, the line became over-
pressurized, resulting in at least three explosions and multiple fires damaging 60-80 structures,
destroying 15 homes and rendering an additional 19 homes uninhabitable in Lawrence, Andover,
and North Andover. In addition, hundreds of businesses were affected. Many residents lived in
temporary housing for months, primarily due to the lack of heat and hot water in their homes.
On September 14, 2018 Massachusetts Governor Charlie Baker declared a state of emergency and
the Chairman of the Department of Public Utilities appointed Eversource to evaluate and oversee
the management of the gas distribution system in the affected area. In the weeks following the gas
line explosions and fires, representatives from various state and federal agencies, including the
Division of Insurance, staffed Lawrence, Andover, and North Andover disaster recovery centers
assisting affected consumers by conducting listening sessions and advising consumers on how to
file claims.
DOI Response and Special Examination
While the great majority of claims were processed directly by Columbia Gas, many claims,
including claims resulting in significant damage, were handled directly by insurance carriers who
later recovered losses from Columbia Gas. On September 27, 2018 the Division initiated a special
examination of the top 25 multi-peril homeowners insurer groups in the Commonwealth and of
the Massachusetts Property Insurance Underwriters Association (MPIUA) for the purpose of
determining the effect of the gas line explosions and subsequent fires on the home insurance
market. The special examination was carried out pursuant to the relevant standards set forth in
Massachusetts Division of Insurance Annual Home Insurance Report For Calendar Year 2018
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M.G.L. c.175, § 4, as the Division deemed prudent and in the best interest of policyholders and
the public.
Columbia Gas
The Massachusetts Emergency Management Agency (MEMA) reported that there were 24,417
claims received from Columbia Gas’s customers, of which Columbia Gas had resolved 17,227 as
of December 21, 2018 4. These 24,417 claims were filed directly with Columbia Gas rather than
through insurance companies. MEMA also reported that $77.96 million had been paid out to
customers, including $19.47 million to business customers. More than 2,200 families --
approximately 8,000 individuals -- utilized Columbia Gas or MEMA temporary housing.
Columbia Gas replaced more than 18,000 potentially affected gas appliances with new gas
appliances, including gas stoves, furnaces and hot water heaters and approximately 7,500
residential and business meters were relit. Columbia Gas also replaced about 50 miles of gas main
lines and more than 5,000 service lines. In early May 2019, NiSource, the parent company of
Columbia Gas of Massachusetts, reported that third party claims related to the Merrimack Valley
gas disaster could cost greater than $1 billion. This amount includes property damage, personal
injury, infrastructure damage and mutual aid payments to other utilities that helped in the recovery
and restoration efforts. 5
Reported Claims and Losses
The Division requested that the top 25 multi-peril homeowners insurer groups and the
Massachusetts Property Insurance Underwriters Association (MPIUA) report cumulative claim
counts and loss amounts as of October 17, 2018, November 17, 2018, December 17, 2018 and
January 17, 2019. As previously noted, the majority of the gas incident claims were filed directly
with Columbia Gas rather than having been filed through an insurance company; consequently,
the great majority of claims were not reflected in the reported data. A total of 851 insurer handled
claims were reported to the Division compared to the 24,417 claims handled by Columbia Gas.
Similarly, insurers reported $12,099,044 in incurred losses while $77.96 million dollars was paid
out by Columbia Gas as of December 2018.
The table below summarizes reported claim counts and losses by line of business. In particular,
the top 25 insurers and the MPIUA handled the following claims:
• 851 reported claims across all lines, totaling $12,099,044 of reported losses
- 394 claims in Lawrence and $4,678,173 in losses;
- 274 claims in Andover and $3,942,610 in losses;
4
December 21, 2018 MEMA report -
https://www.mass.gov/files/documents/2018/12/21/MEMA%20Reports%2017-8.pdf
5
Kashinsky, Lisa (May 1, 2019). "Columbia Gas parent company says cost for Merrimack Valley gas disaster could
hit $1B". Boston Herald
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- 183 claims in North Andover and $3,478,260 in losses.
• 714 reported residential claims (84% of the 851 total) resulting in $9,357,702 in reported
losses with an average loss size of $13,106.
- 342 claims in Lawrence and $4,048,652 in losses;
- 221 claims in Andover and $2,320,198 in losses;
- 151 claims in North Andover and $2,988,851 in losses
• 84 reported commercial property claims (9.9% of the total) and $2,187,633 in reported
losses with an average loss size of $26,043.
- 35 claims in Lawrence and $408,944 in losses;
- 30 claims in Andover and $1,405,633 in losses;
- 19 claims in North Andover and $373,056 in losses.
• 53 reported business interruption claims (6.2% of the total) and $553,709 of reported losses
with an average loss size of $10,447.
- 17 claims in Lawrence and $220,577 in losses;
- 23 claims in Andover and $216,779 in losses:
- 13 claims in North Andover and $116,353 in losses
• Personal auto, commercial auto and all other lines of insurance had no reported claims or
reported losses.
September 13, 2018 Gas Line
Explosions/Fires Reported as
of 1/17/2019* Claims Reported Reported Losses
Residential Property** 714 9,357,702
Commercial Property** 84 2,187,633
Personal Auto 0 0
Commercial Auto 0 0
Business Interruption 53 553,709
All Other Lines*** 0 0
Totals 851 12,099,044
* Claims and losses as of 1/12/19
** Property with 1-4 rental units is considered residential property; property with more than 4 rental units is considered commercial property.
***The "All Other Lines" category could include claims for damage to a boat, injury/death to a pet etc. not reported in the other above referenced line
of insurance.
Massachusetts Division of Insurance Annual Home Insurance Report For Calendar Year 2018
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Composition of the Massachusetts Market
Home insurance covers non-commercial property for the risks of damage to structural and personal
property as well as for the risk of personal liability claims. In 2018, insurance companies collected
approximately $2.5 billion in written premium for home insurance policies in Massachusetts,
making it the largest line of property and casualty coverage after private passenger motor vehicle
insurance.
MASSACHUSETTS CALENDAR YEAR 2018 LICENSED PROPERTY & CASUALTY
INSURANCE MARKET
SOURCE: NAIC DATABASE AS OF 06/17/2019 (Unaudited)
Total Admitted Market* - $14,533,554,685
PRODUCTS LIABILITY 56,320,514
MORTGAGE GU