By Rich Fahey
Globe Correspondent / February 7, 2008
Thirty years ago today the Blizzard of '78 was ravaging the South Shore. Wind gusts of more than 100 miles per hour combined with heavy snowfall to destroy thousands of homes and boats. Before it was over, more than two dozen people would be dead statewide.
What would happen if the same storm hit the South Shore today? Would the flooding, destruction of property, and beach erosion be as severe? Or would changes in building codes and in the way we respond to storms result in less property damage and fewer lives lost?
The answer: We might be better prepared, but the damage could be just as great - or greater.
Specialists say the almost continuous beach erosion from storms in the ensuing 30 years has created a new set of problems, should a storm like the Blizzard of '78 hit the South Shore again.
"The erosion shifts from previous storms have moved the flood plain, putting more homeowners in jeopardy," said Rebecca Haney, a coastal geologist for the state Office of Coastal Zone Management. "In addition, there has been a significant amount of construction in those flood plain areas."
Many of the summer cottages that were unoccupied in coastal towns during the storm 30 years ago have been converted to year-round residences, putting more families squarely in the bull's-eye of a sequel to '78.
"Those cottages are now year-round residences, many of them still vulnerable to a storm," said state Senator Robert L. Hedlund of Weymouth, who represents many of the coastal communities that were devastated in the Blizzard of '78.
Partly offsetting that vulnerability is the fact that homes along the coast, while more exposed, are better built than they were 30 years ago.
Neil Duggan, Scituate's building commissioner for the past 14 years, saw his home - a converted cottage on Lighthouse Road - heavily damaged during the blizzard. Duggan, like others, wanted to rebuild. By 1979, revisions to the state building code required that any rebuilt home in a danger area had to be elevated on 11-foot-high pilings or columns, said Duggan. In 1982, he said, improved federal maps were developed for Scituate, requiring higher elevations in some hazard areas.
Portions of the state building code are routinely refined; the most recent change is a requirement for high-impact windows in debris-borne areas and more stringent hurricane-resistant construction requirements.
Still, erosion is eating away at the buffer between the ocean and coastal communities. Communities such as Scituate and Duxbury have been losing on average a half-foot of beach each year.
While some emphasis has been on building sea walls, the beaches and dunes - not the walls - are the first line of defense against coastal flooding. Hedlund said he was able secure federal money for beach renourishment at Nantasket Beach in Hull, but not for sea wall construction, because "the federal government considered the beach more important when it comes to flood control."
Haney, the state coastal geologist, said the Massachusetts Wetlands Protection Act and subsequent regulations designed to protect beaches and dunes have helped, but storms have still wreaked havoc with the shoreline.
Towns and cities have taken it upon themselves to prepare for the worst. In Hull, which was devastated by floods in '78, an emergency operations center was built as part of renovations to Memorial Middle School.
Acting fire chief Robert Hollingshead, who is also in charge of Hull's emergency preparedness, meets with the heads of town agencies several times a year and whenever a major storm is forecast.
Hollingshead, who joined the Fire Department just after the 1978 storm, said that advancements in technology have improved communication with the public in emergencies. "We have cable TV and the Internet, and we can reach many people quickly."
The state has recognized the issues. In February 2006, Governor Mitt Romney created the Massachusetts Coastal Hazards Commission to review practices and policies, identify information gaps, and draft recommendations for improvements.
In May 2007, the commission released its final report, including a series of recommendations to help safeguard coastal areas. They included updating coastal maps to pinpoint risk and measure rising sea levels due to climate change; modeling potential damage from future storms to alert communities; and providing incentives, such as insurance discounts, for homeowners along the coast to retrofit their homes against storms.
Peter Judge, public information officer for the Massachusetts Emergency Management Agency, the successor to the Massachusetts Civil Defense Agency, said that after the '78 storm, Governor Michael Dukakis issued an executive order creating an emergency management team. It includes federal, state, and local officials, including liaisons from a dozen state agencies, and meets regularly.
"I think if there's two areas we've improved in since 1978, it would be in communication and coordination," said Judge.
In 1978, some people didn't believe the forecast or disregarded it, and thousands were trapped on roads or in makeshift shelters such as car dealerships and restaurants.
"We can't stop people from going out into the storm, but we can let them know what they're in for," said Judge.
Rich Fahey can be reached at faheywrite@yahoo.com
Showing posts with label coastal home. Show all posts
Showing posts with label coastal home. Show all posts
Friday, February 8, 2008
Tuesday, January 15, 2008
Wednesday, January 9, 2008
R.I. firm offers policies on Cape, coastal areas
By Kimberly Blanton
Globe Staff / January 9, 2008
Globe Staff / January 9, 2008
Click here to read about the Narragansett Bay Insurance Company - an option for homeowners who live in coastal areas.
To obtain a quote from Narragansett Bay Insurance Company, contact The Howes Insurance Agency.
Friday, January 4, 2008
By JACK SHEA, Vineyard Gazette
New home construction costs on the Island could increase more than 10 per cent as a result of new state building codes requiring one and two-story buildings to withstand winds of 110 miles per hour beginning Jan. 1.
For some prospective home owners and builders, the changes have already blown away their plans.
Tisbury building inspector Kenneth Barwick said he already has heard from home builders on a budget.
“People have called me to say they cannot afford to go forward,” Mr. Barwick said. “The new rules will significantly accelerate the cost of construction, materials and professional services. The days of pulling the three-bedroom Cape plan out of the closet are over, unfortunately.”
The new building code rules were issued, with last-minute amendments last week, by the state board of building regulations and standards.
The new seventh edition of the state building codes increased structural wind resistance requirements from 90 to 110 mph. The code also created a wind-debris zone one mile inland from mean tide in which houses must be able to handle winds of 110 mph. The new zone could affect the location of new houses relative to the prevailing wind direction and requires more stringent construction methods than houses constructed more than one mile inland.
The new code, four years in the adopting, also increases the requirements for fastening or “tie down” of foundations, walls and roofs as a single unit to reduce wind shear or vertical lift in houses under heavy winds.
Edgartown building inspector Leonard Jason Jr. also noted changes in plumbing and electrical safety wiring and outlets that he said will add some cost to construction.
He said the state also intends to institute new licensing in July for shingling, siding, window installers, roofing and demolition work. A grandfather clause is likely to be included in the license changes, as Mr. Jason reads the prospective license procedures.
Island building inspectors processed a flurry of building permit applications before the end of the year under the sixth edition of the codes and before the new regulations took effect. Harried building inspectors in Edgartown and West Tisbury in particular processed several dozen applications by builders in the final two weeks of 2007 who were seeking to be regulated under the sixth edition building rules.
To complicate matters, the final codes were e-mailed by the state to building inspectors just before they were to take effect.
A principal cost increase for homeowners and builders will come through the cost of windows, which must now be laminated, similar to the glass used in skylights. In some cases, that could double window costs.
Windows typically account for 10 to 18 per cent of construction costs, according to an informal survey of Island builders this week.
Connie O’Doherty, owner of Butterwood Properties Inc., a high-end Edgartown contractor, reported quotes given him for a mid-range standard window would double the cost. Mr. O’Doherty noted, as did several building inspectors, that the changes in window requirements have window makers scrambling to retool in order to meet the new codes.
Despite state extension of the new code deadline from last April 1to Jan. 1, the state did not complete the code until literally at year-end. “The guys the state usually send to educate us are good. I get the feeling they are embarrassed,” Mr. Jason said.
Indeed, additions, amendments and clarifications, many by e-mail, have been trickling across building inspector desks over the past week, frustrating their efforts to answer queries clearly.
For the past week, more detail in the code has become clear as inspectors dealt with analyzing new regulations while processing permits under the old regulations. The complete building code is about 1,600 pages.
West Tisbury building inspector Ernest P. Mendenhall surmised early last week that the code will likely require more services from engineers and architects and more inspection.
“Under these regulations I’ll be at building sites at least once or twice more because of increased regulations with regard to fastening components,” he said.
Mr. Jason and Mr. Barwick concurred. Mr. Barwick noted that newer regulations for small variances in cantilevering, for example, will require an engineer’s stamp, representing a new cost for home builders.
“The code is going to require more engineering and architects, depending on the size of the house,” he said. “Simple repairs and additions will cost more.”
New home construction costs on the Island could increase more than 10 per cent as a result of new state building codes requiring one and two-story buildings to withstand winds of 110 miles per hour beginning Jan. 1.
For some prospective home owners and builders, the changes have already blown away their plans.
Tisbury building inspector Kenneth Barwick said he already has heard from home builders on a budget.
“People have called me to say they cannot afford to go forward,” Mr. Barwick said. “The new rules will significantly accelerate the cost of construction, materials and professional services. The days of pulling the three-bedroom Cape plan out of the closet are over, unfortunately.”
The new building code rules were issued, with last-minute amendments last week, by the state board of building regulations and standards.
The new seventh edition of the state building codes increased structural wind resistance requirements from 90 to 110 mph. The code also created a wind-debris zone one mile inland from mean tide in which houses must be able to handle winds of 110 mph. The new zone could affect the location of new houses relative to the prevailing wind direction and requires more stringent construction methods than houses constructed more than one mile inland.
The new code, four years in the adopting, also increases the requirements for fastening or “tie down” of foundations, walls and roofs as a single unit to reduce wind shear or vertical lift in houses under heavy winds.
Edgartown building inspector Leonard Jason Jr. also noted changes in plumbing and electrical safety wiring and outlets that he said will add some cost to construction.
He said the state also intends to institute new licensing in July for shingling, siding, window installers, roofing and demolition work. A grandfather clause is likely to be included in the license changes, as Mr. Jason reads the prospective license procedures.
Island building inspectors processed a flurry of building permit applications before the end of the year under the sixth edition of the codes and before the new regulations took effect. Harried building inspectors in Edgartown and West Tisbury in particular processed several dozen applications by builders in the final two weeks of 2007 who were seeking to be regulated under the sixth edition building rules.
To complicate matters, the final codes were e-mailed by the state to building inspectors just before they were to take effect.
A principal cost increase for homeowners and builders will come through the cost of windows, which must now be laminated, similar to the glass used in skylights. In some cases, that could double window costs.
Windows typically account for 10 to 18 per cent of construction costs, according to an informal survey of Island builders this week.
Connie O’Doherty, owner of Butterwood Properties Inc., a high-end Edgartown contractor, reported quotes given him for a mid-range standard window would double the cost. Mr. O’Doherty noted, as did several building inspectors, that the changes in window requirements have window makers scrambling to retool in order to meet the new codes.
Despite state extension of the new code deadline from last April 1to Jan. 1, the state did not complete the code until literally at year-end. “The guys the state usually send to educate us are good. I get the feeling they are embarrassed,” Mr. Jason said.
Indeed, additions, amendments and clarifications, many by e-mail, have been trickling across building inspector desks over the past week, frustrating their efforts to answer queries clearly.
For the past week, more detail in the code has become clear as inspectors dealt with analyzing new regulations while processing permits under the old regulations. The complete building code is about 1,600 pages.
West Tisbury building inspector Ernest P. Mendenhall surmised early last week that the code will likely require more services from engineers and architects and more inspection.
“Under these regulations I’ll be at building sites at least once or twice more because of increased regulations with regard to fastening components,” he said.
Mr. Jason and Mr. Barwick concurred. Mr. Barwick noted that newer regulations for small variances in cantilevering, for example, will require an engineer’s stamp, representing a new cost for home builders.
“The code is going to require more engineering and architects, depending on the size of the house,” he said. “Simple repairs and additions will cost more.”
Thursday, December 27, 2007
Activist vows to fight insurance rate hikes
By Sarah Shemkus
STAFF WRITER, Cape Cod Times
In 2008, Eastham activist Paula Aschettino plans to take her battle over homeowners insurance rates to the Statehouse, the Division of Insurance and, if need be, directly to the governor's office.
"If we do not find that we get any attention, then we will call our citizens to action and go picket at his doorstep," said Aschettino, founder of Citizens for Homeowners Insurance Reform, a regional activist group she formed a little more than a year ago.
Homeowners coverage first became a concern on the Cape and Islands in 2004, when insurance companies began pulling out of the area, claiming there was an unacceptably high risk of catastrophic storm damages.
As companies fled, thousands of homeowners were forced into the FAIR Plan, the state's insurance program that provides coverage for those unable to obtain coverage on the private market.
At the same time, FAIR Plan premiums were going up. In 2006, rates went up by 25 percent on the Cape and Islands. The agency's request for an additional 25 percent increase is currently pending, although state officials may not make that decision until late January or February.
Aschettino became active in the fight after she was dropped by her insurer and had to find alternative coverage. Watching her fellow Cape residents also struggling, she decided to take action.
Her efforts started in October 2006, with a petition demanding changes in several insurance company practices.
That initial petition was so successful that she formed a grass-roots group to fight for insurance reform.
This year, her organization forced the issue into the spotlight, bringing statewide attention to what had previously been viewed as a Cape Cod problem.
"At the beginning of this year, it wasn't on people's radar screen, at least in Boston," said state Sen. Robert O'Leary, D-Barnstable, an advocate for insurance reform. "That's changed — people are aware of the issue now."
Aschettino and her fellow activists have worked to promote potential solutions throughout the year.
They have organized letter-writing campaigns in opposition to the proposed FAIR Plan rate increase and rallied local residents to testify at hearings held by the Special Commission on Homeowners Insurance, a panel the Legislature created to study the issue.
The group also staged a Boston demonstration in front of the annual meeting of the Property Casualty Insurers Association of America, in an attempt to raise awareness among insurance companies about the Cape and Islands' plight.
"I am pleased with what was accomplished in one year," Aschettino said recently. "I feel enthusiastic."
Heading into the new year, her top priority is educating both consumers and lawmakers.
She also hopes to hold public outreach forums to update residents about the ongoing FAIR Plan rate increase struggle and the report issued last month by the special commission.
Most of the 4,000 current members of her group are from the southeastern part of the state; she hopes to add homeowners from the Boston area and the North and South shores.
"That's going to give us more voice," Aschettino said.
Though she has already made significant progress in promoting her cause, Aschettino sees a lot more work left to be done in 2008.
"They are going to hear from us frequently, and see us in the Statehouse," she said. "I think we are going to be very powerful this year, more so than we have been."
STAFF WRITER, Cape Cod Times
In 2008, Eastham activist Paula Aschettino plans to take her battle over homeowners insurance rates to the Statehouse, the Division of Insurance and, if need be, directly to the governor's office.
"If we do not find that we get any attention, then we will call our citizens to action and go picket at his doorstep," said Aschettino, founder of Citizens for Homeowners Insurance Reform, a regional activist group she formed a little more than a year ago.
Homeowners coverage first became a concern on the Cape and Islands in 2004, when insurance companies began pulling out of the area, claiming there was an unacceptably high risk of catastrophic storm damages.
As companies fled, thousands of homeowners were forced into the FAIR Plan, the state's insurance program that provides coverage for those unable to obtain coverage on the private market.
At the same time, FAIR Plan premiums were going up. In 2006, rates went up by 25 percent on the Cape and Islands. The agency's request for an additional 25 percent increase is currently pending, although state officials may not make that decision until late January or February.
Aschettino became active in the fight after she was dropped by her insurer and had to find alternative coverage. Watching her fellow Cape residents also struggling, she decided to take action.
Her efforts started in October 2006, with a petition demanding changes in several insurance company practices.
That initial petition was so successful that she formed a grass-roots group to fight for insurance reform.
This year, her organization forced the issue into the spotlight, bringing statewide attention to what had previously been viewed as a Cape Cod problem.
"At the beginning of this year, it wasn't on people's radar screen, at least in Boston," said state Sen. Robert O'Leary, D-Barnstable, an advocate for insurance reform. "That's changed — people are aware of the issue now."
Aschettino and her fellow activists have worked to promote potential solutions throughout the year.
They have organized letter-writing campaigns in opposition to the proposed FAIR Plan rate increase and rallied local residents to testify at hearings held by the Special Commission on Homeowners Insurance, a panel the Legislature created to study the issue.
The group also staged a Boston demonstration in front of the annual meeting of the Property Casualty Insurers Association of America, in an attempt to raise awareness among insurance companies about the Cape and Islands' plight.
"I am pleased with what was accomplished in one year," Aschettino said recently. "I feel enthusiastic."
Heading into the new year, her top priority is educating both consumers and lawmakers.
She also hopes to hold public outreach forums to update residents about the ongoing FAIR Plan rate increase struggle and the report issued last month by the special commission.
Most of the 4,000 current members of her group are from the southeastern part of the state; she hopes to add homeowners from the Boston area and the North and South shores.
"That's going to give us more voice," Aschettino said.
Though she has already made significant progress in promoting her cause, Aschettino sees a lot more work left to be done in 2008.
"They are going to hear from us frequently, and see us in the Statehouse," she said. "I think we are going to be very powerful this year, more so than we have been."
Thursday, December 6, 2007
Commission report offers solutions to home insurance dilemma, pleasing few
By Steve Myrick, The Martha Vineyard Times - December 6, 2007
When the remnants of Hurricane Noel blew over Martha's Vineyard last month with wind gusts topping 70 miles per hour, Wesley Brown was one of many local homeowners who's property was damaged by the lashing winds. A heavy old tree came crashing down, clipping a rain gutter and taking out a porch post.
In all the years he has insured his Oak Bluffs home, Mr. Brown doesn't remember filing a property claim, and he won't be filing a claim for this damage, either.
Like many Island property owners, his insurance premiums have skyrocketed in recent years. When his insurance company stopped writing policies of any kind on the Vineyard, his only viable option was the FAIR (Fair Access to Insurance Requirements) Plan, a state organized agency considered the insurer of last resort.
The FAIR Plan recently raised its estimate of his home's value, which nudged him into a category of insurance requiring a five percent deductible for wind damage. For Mr. Brown, that means he has to pay the first $33,000 of damage. The harm to his porch didn't merit even a moment's consideration.
"I don't know who came up with the name FAIR Plan, but it's anything but fair," said Mr. Brown. "It's really put a lot of people in a terrible bind."
The matter of $33,000 deductibles was one of many issues addressed in a report issued last Friday by the Special Commission on Insurance, appointed to recommend solutions to the perfect storm of complex, sometimes arcane market conditions that have caused significant premium pain for many Vineyard homeowners. (The report is available here.)
Of the 18-page report, eight pages are dissenting opinions signed by eight of the 16 commissioners, indicating the level of disagreement among the legislators, industry representatives, and public advocates appointed to the panel. Among those signing on to a strongly worded dissent are state representative Eric Turkington and senator Robert O'Leary, who represent Martha's Vineyard residents at the statehouse. The lawmakers did not disagree with the reports recommendations, but they feel it does not go nearly far enough.
"It is imperative," wrote the dissenters, " that we take immediate steps to protect consumers beyond those endorsed by the majority of the Commission.
"There is nothing in the report that will change the cost of protecting Island property. The state legislature and the governor will have to agree on new legislation before any of the report's recommendations make it to the bottom line of anyone's insurance bill.
Catastrophic changes
Among the most significant reforms recommended is creation of a state-run catastrophic event fund. Such a fund would build up a reserve of money that would mitigate insurance company losses should a catastrophe like a strong hurricane, a powerful earthquake, or even a calamitous act of terrorism strike Massachusetts. Insurance industry representatives on the commission argue that these catastrophes are more likely now than in the past. Many insurance companies purchase re-insurance, a kind of insurance for the insurers, to protect themselves in the event that many of their customers experience large losses at the same time. All agree the cost of re-insurance has soared, following large losses experienced after several destructive hurricanes in Florida, and after the September 11 attack on the World Trade Center in New York City.
If a catastrophic event fund reduces the risk for insurance companies, the commission majority reasons that many insurers who left the market would come back, introducing more competition and reducing the cost of premiums.
"I think that's a good step," said Ken Ward, vice-president of Martha's Vineyard Insurance. "If you could write a homeowners policy without wind, you could write it for significantly less. If you take that away, the Cape and Islands is a very safe and profitable place for companies to write insurance."
Mr. Brown says such a fund makes sense from his point of view as a consumer. "That sounds like a good idea," he said. "That would take some of the burden off the insurance companies so they can make their rates a little better. They ought to make all the insurance companies that do business in Massachusetts take a fair share of high risk insurance."
A conspicuous omission from the report, however, is any recommendation about how a catastrophe risk pool should be funded. Sen. O'Leary has filed a bill to create a catastrophic event fund that would be funded jointly by state taxpayers and insurance companies. The goal is to establish a $6 billion reserve, the estimated cost of recovery for a rare but very powerful hurricane.
Models for mayhem
Another recommendation of the special commission is appointment of an independent body to study the accuracy and reliability of the scientific models insurance companies use to predict the risk of catastrophic losses. Currently, those formulas are trade secrets, guarded zealously by the companies that create the models and sell their proprietary expertise to insurers.
The complex equations take into account weather patterns, building codes, property values, and a host of other factors. The changing climate and the rising value of coastal properties mean the models calculated dramatically higher risk in recent years, which has resulted in dramatically higher premiums for consumers.
During the commission hearings, consumers criticized this secretive process of predicting risk, and called for more transparency. While recommending an independent study of the models, the report leaves conspicuously absent any suggestion of how the models should be reviewed, who should do it, or what should happen if a review panel finds the models inaccurate.
Dissent divided
Minority factions of the commission issued two separate dissenting reports.
A report issued by three commission members representing the insurance industry strongly opposes the catastrophic event fund. They contend that such a fund would have unintended consequences, including an increase in insurance costs to all consumers, and the possibility of insurance insolvencies. The dissenters also dispute majority's contention that a catastrophic event fund would reduce the risk to insurers, drawing them back into the Massachusetts marketplace. They say it's more likely that more companies will leave, creating an even more dysfunctional market.
"We do not believe that a catastrophe fund will lower premiums for coastal homeowners," wrote the dissenters. "Premiums have not gone down in Florida, the only state with such a fund, and we see no reason that Massachusetts will be any different. It would be unfair to give people false hope that their premiums will go down."
A minority of five commissioners, including Rep. Turkington and Sen. O'Leary, issued a separate dissent. While supporting a catastrophe fund and many other recommendations, the dissenters charge the commission's proposals don't go nearly far enough to help consumers on the Cape and Islands. They contend that the two risk-forecasting models adopted by the FAIR Plan vary widely in their predictions, and that the models have not been calibrated to reflect historic conditions in Massachusetts.
The group advocates a new hurricane risk model, created and maintained with state funds, with all formulas open to public scrutiny.
"The FAIR Plan must not be allowed to use a model in support of its rate filing unless that model's underlying data, formulas, and calculations are fully disclosed," says the dissenting report.
Middle Ground
While the report offers long-term solutions to the property insurance dilemma, many Island homeowners are faced with a more immediate concern.
On December 15, the FAIR Plan deductible for wind and hail damage, already increased for many, will be increased for all Island homeowners. The deductible will rise from two to five percent of the home's value.
The median price of a home sold on the Vineyard last year was $695,000. Using that figure as an example, the FAIR Plan will only cover damage in excess of $34,750, the five percent deductible.
Also pending is a FAIR Plan request for a 25-percent increase in premiums, in addition to the 25-percent increase approved and implemented last year. The state attorney general is challenging last year's increase before the state's highest court, requesting instead, a 29-percent decrease in premiums.
The insurance commissioner is expected to rule on this year's request for a rate increase early in 2008.
"The commission, they study things, but there's not a lot in here that triggers a reduction to the premium, or the added risk that the citizens are asked to take on," said Paula Aschettino, a Cape Cod-based grass-roots organizer who testified before the insurance commission. "We cannot stop, and won't stop, to look for the proper way to make our rates reasonable. At the moment they are unreasonable and excessive."
"Is there an answer? Yeah, of course," said Mr. Ward. "The answer is probably some place in the middle, which isn't really going to satisfy the folks that feel they're paying too much, and it isn't going to satisfy the insurance people."
When the remnants of Hurricane Noel blew over Martha's Vineyard last month with wind gusts topping 70 miles per hour, Wesley Brown was one of many local homeowners who's property was damaged by the lashing winds. A heavy old tree came crashing down, clipping a rain gutter and taking out a porch post.
In all the years he has insured his Oak Bluffs home, Mr. Brown doesn't remember filing a property claim, and he won't be filing a claim for this damage, either.
Like many Island property owners, his insurance premiums have skyrocketed in recent years. When his insurance company stopped writing policies of any kind on the Vineyard, his only viable option was the FAIR (Fair Access to Insurance Requirements) Plan, a state organized agency considered the insurer of last resort.
The FAIR Plan recently raised its estimate of his home's value, which nudged him into a category of insurance requiring a five percent deductible for wind damage. For Mr. Brown, that means he has to pay the first $33,000 of damage. The harm to his porch didn't merit even a moment's consideration.
"I don't know who came up with the name FAIR Plan, but it's anything but fair," said Mr. Brown. "It's really put a lot of people in a terrible bind."
The matter of $33,000 deductibles was one of many issues addressed in a report issued last Friday by the Special Commission on Insurance, appointed to recommend solutions to the perfect storm of complex, sometimes arcane market conditions that have caused significant premium pain for many Vineyard homeowners. (The report is available here.)
Of the 18-page report, eight pages are dissenting opinions signed by eight of the 16 commissioners, indicating the level of disagreement among the legislators, industry representatives, and public advocates appointed to the panel. Among those signing on to a strongly worded dissent are state representative Eric Turkington and senator Robert O'Leary, who represent Martha's Vineyard residents at the statehouse. The lawmakers did not disagree with the reports recommendations, but they feel it does not go nearly far enough.
"It is imperative," wrote the dissenters, " that we take immediate steps to protect consumers beyond those endorsed by the majority of the Commission.
"There is nothing in the report that will change the cost of protecting Island property. The state legislature and the governor will have to agree on new legislation before any of the report's recommendations make it to the bottom line of anyone's insurance bill.
Catastrophic changes
Among the most significant reforms recommended is creation of a state-run catastrophic event fund. Such a fund would build up a reserve of money that would mitigate insurance company losses should a catastrophe like a strong hurricane, a powerful earthquake, or even a calamitous act of terrorism strike Massachusetts. Insurance industry representatives on the commission argue that these catastrophes are more likely now than in the past. Many insurance companies purchase re-insurance, a kind of insurance for the insurers, to protect themselves in the event that many of their customers experience large losses at the same time. All agree the cost of re-insurance has soared, following large losses experienced after several destructive hurricanes in Florida, and after the September 11 attack on the World Trade Center in New York City.
If a catastrophic event fund reduces the risk for insurance companies, the commission majority reasons that many insurers who left the market would come back, introducing more competition and reducing the cost of premiums.
"I think that's a good step," said Ken Ward, vice-president of Martha's Vineyard Insurance. "If you could write a homeowners policy without wind, you could write it for significantly less. If you take that away, the Cape and Islands is a very safe and profitable place for companies to write insurance."
Mr. Brown says such a fund makes sense from his point of view as a consumer. "That sounds like a good idea," he said. "That would take some of the burden off the insurance companies so they can make their rates a little better. They ought to make all the insurance companies that do business in Massachusetts take a fair share of high risk insurance."
A conspicuous omission from the report, however, is any recommendation about how a catastrophe risk pool should be funded. Sen. O'Leary has filed a bill to create a catastrophic event fund that would be funded jointly by state taxpayers and insurance companies. The goal is to establish a $6 billion reserve, the estimated cost of recovery for a rare but very powerful hurricane.
Models for mayhem
Another recommendation of the special commission is appointment of an independent body to study the accuracy and reliability of the scientific models insurance companies use to predict the risk of catastrophic losses. Currently, those formulas are trade secrets, guarded zealously by the companies that create the models and sell their proprietary expertise to insurers.
The complex equations take into account weather patterns, building codes, property values, and a host of other factors. The changing climate and the rising value of coastal properties mean the models calculated dramatically higher risk in recent years, which has resulted in dramatically higher premiums for consumers.
During the commission hearings, consumers criticized this secretive process of predicting risk, and called for more transparency. While recommending an independent study of the models, the report leaves conspicuously absent any suggestion of how the models should be reviewed, who should do it, or what should happen if a review panel finds the models inaccurate.
Dissent divided
Minority factions of the commission issued two separate dissenting reports.
A report issued by three commission members representing the insurance industry strongly opposes the catastrophic event fund. They contend that such a fund would have unintended consequences, including an increase in insurance costs to all consumers, and the possibility of insurance insolvencies. The dissenters also dispute majority's contention that a catastrophic event fund would reduce the risk to insurers, drawing them back into the Massachusetts marketplace. They say it's more likely that more companies will leave, creating an even more dysfunctional market.
"We do not believe that a catastrophe fund will lower premiums for coastal homeowners," wrote the dissenters. "Premiums have not gone down in Florida, the only state with such a fund, and we see no reason that Massachusetts will be any different. It would be unfair to give people false hope that their premiums will go down."
A minority of five commissioners, including Rep. Turkington and Sen. O'Leary, issued a separate dissent. While supporting a catastrophe fund and many other recommendations, the dissenters charge the commission's proposals don't go nearly far enough to help consumers on the Cape and Islands. They contend that the two risk-forecasting models adopted by the FAIR Plan vary widely in their predictions, and that the models have not been calibrated to reflect historic conditions in Massachusetts.
The group advocates a new hurricane risk model, created and maintained with state funds, with all formulas open to public scrutiny.
"The FAIR Plan must not be allowed to use a model in support of its rate filing unless that model's underlying data, formulas, and calculations are fully disclosed," says the dissenting report.
Middle Ground
While the report offers long-term solutions to the property insurance dilemma, many Island homeowners are faced with a more immediate concern.
On December 15, the FAIR Plan deductible for wind and hail damage, already increased for many, will be increased for all Island homeowners. The deductible will rise from two to five percent of the home's value.
The median price of a home sold on the Vineyard last year was $695,000. Using that figure as an example, the FAIR Plan will only cover damage in excess of $34,750, the five percent deductible.
Also pending is a FAIR Plan request for a 25-percent increase in premiums, in addition to the 25-percent increase approved and implemented last year. The state attorney general is challenging last year's increase before the state's highest court, requesting instead, a 29-percent decrease in premiums.
The insurance commissioner is expected to rule on this year's request for a rate increase early in 2008.
"The commission, they study things, but there's not a lot in here that triggers a reduction to the premium, or the added risk that the citizens are asked to take on," said Paula Aschettino, a Cape Cod-based grass-roots organizer who testified before the insurance commission. "We cannot stop, and won't stop, to look for the proper way to make our rates reasonable. At the moment they are unreasonable and excessive."
"Is there an answer? Yeah, of course," said Mr. Ward. "The answer is probably some place in the middle, which isn't really going to satisfy the folks that feel they're paying too much, and it isn't going to satisfy the insurance people."
Tuesday, December 4, 2007
Lower your wind deductible
Homeowners who take one or more of the following steps to mitigate the risk of wind damage may be able to have their FAIR Plan wind deductible reduced or eliminated.
Windows: Install impact-resistant glass or shutters that close over window openings to prevent flying debris from breaking window panes.
Entry doors: Install at least three hinges and a dead bolt security lock with a bolt at least 1 inch long.
Garage doors: Install a garage door and track system that is labeled and rated for high wind pressures and debris impact.
Roof and foundation connections: Anchor the roof to the walls with metal clips and straps. The walls must also be properly anchored to the foundation, and, if the house is more than one story, the upper story wall framing must be firmly connected to the lower framing.
Source: MA FAIR Plan
Windows: Install impact-resistant glass or shutters that close over window openings to prevent flying debris from breaking window panes.
Entry doors: Install at least three hinges and a dead bolt security lock with a bolt at least 1 inch long.
Garage doors: Install a garage door and track system that is labeled and rated for high wind pressures and debris impact.
Roof and foundation connections: Anchor the roof to the walls with metal clips and straps. The walls must also be properly anchored to the foundation, and, if the house is more than one story, the upper story wall framing must be firmly connected to the lower framing.
Source: MA FAIR Plan
FAIR plan to hike wind deductible for Cape homeowners
By SARAH SHEMKUS
Cape Cod Times
December 04, 2007 6:00 AM
Thousands of homeowners could soon be on the hook for more of the damages incurred by storms when the FAIR Plan implements a plan to raise wind deductibles on some Cape and Islands policies this month.
The move has drawn the ire of local residents and activists, who claim that increasing deductibles is equivalent to raising premiums.
"I call this a rate hike in disguise," said Paula Aschettino, an Eastham resident and the founder of activist group Citizens for Homeowners Insurance Reform.
A deductible is the amount a policyholder must spend toward repairing damages before the insurance company will cover any costs.
FAIR Plan President John Golembeski defended the deductible increase, which takes effect Dec. 15.
In 2005, he explained, his staff conducted an analysis of the insurance marketplace and determined that the FAIR Plan's wind deductibles on the Cape and Islands were not in line with those of private companies.
"The change was made so that the wind deductibles that we offer are consistent with those that are offered by other insurers," he said. "It is a rule change, not a rate change."
In other regions, including SouthCoast, the FAIR Plan's deductibles were already consistent with the private market, he said.
The FAIR Plan, an association of all the companies that offer homeowners insurance in the state, provides coverage for those who are unable to obtain it on the private market. For the past few years, private insurers have been pulling out of coastal areas, driving more and more homeowners into this insurance of last resort.
As of the end of October, nearly 59,000 FAIR Plan policies were in effect on the Cape and Islands, representing about 44 percent of the region's homeowners.
When the recent changes become effective, FAIR Plan wind deductibles will go from 1 percent of the insured value of the property to 2 percent for two groups of Cape homeowners: those located within a half-mile of the coast and insured for less than $200,000, as well as those located farther from the water and insured for less than $500,000.
Therefore, the wind deductible for a home on the Cape that is insured for $500,000 would go from $5,000 to $10,000.
On Nantucket and Martha's Vineyard, homes insured for between $200,000 and $599,999 will see their deductible go from 2 percent to 5 percent.
At the urging of state Division of Insurance officials, however, the FAIR Plan included provisions that allow policyholders to reduce or eliminate their wind deductible by taking steps to mitigate the risk to their home.
Because implementing some of these measures can be costly, Aschettino questioned whether these mitigation provisions would actually improve homeowners bottom lines.
"I don't know whether citizens really look at that as savings," she said.
Aschettino is also unhappy that Insurance Commissioner Nonnie Burnes approved the change in deductible without a public hearing.
The law does not require such a hearing, but Aschettino said that the public has a right to offer input on a change as significant as this.
"What really concerns us is the Division of Insurance allowing this to happen," she said. "I feel that we are speaking to deaf ears."
Kimberly Haberlin, spokeswoman for Burnes, said that such a charge does not accurately reflect the commissioner's role in the insurance market.
"The commissioner is very concerned about the burdens Cape residents are facing due to the current state of the homeowners insurance market," Haberlin said. "(She) is responsible for helping to create a healthy insurance market so, at the end of the day, companies can meet their obligations and keep their promises to their policyholders. Ensuring that a stable environment exists is in the best interest of all Massachusetts consumers."
Burnes was a member of the legislatively created special commission on homeowners insurance that recently recommended ways to combat the problem of rising insurance costs.
The commissioner's office also recently agreed to a meeting with Aschettino and state Sen. Robert O'Leary, who has been a vocal advocate of homeowners insurance reform.
"We just feel that the market on the Cape, it's just not functioning," said O'Leary. He would like, he said, "to remind (Burnes) of the impact that this is having, and that we see this as a rate increase for all intents and purposes. We'd like her to move more cautiously here."
Cape Cod Times
December 04, 2007 6:00 AM
Thousands of homeowners could soon be on the hook for more of the damages incurred by storms when the FAIR Plan implements a plan to raise wind deductibles on some Cape and Islands policies this month.
The move has drawn the ire of local residents and activists, who claim that increasing deductibles is equivalent to raising premiums.
"I call this a rate hike in disguise," said Paula Aschettino, an Eastham resident and the founder of activist group Citizens for Homeowners Insurance Reform.
A deductible is the amount a policyholder must spend toward repairing damages before the insurance company will cover any costs.
FAIR Plan President John Golembeski defended the deductible increase, which takes effect Dec. 15.
In 2005, he explained, his staff conducted an analysis of the insurance marketplace and determined that the FAIR Plan's wind deductibles on the Cape and Islands were not in line with those of private companies.
"The change was made so that the wind deductibles that we offer are consistent with those that are offered by other insurers," he said. "It is a rule change, not a rate change."
In other regions, including SouthCoast, the FAIR Plan's deductibles were already consistent with the private market, he said.
The FAIR Plan, an association of all the companies that offer homeowners insurance in the state, provides coverage for those who are unable to obtain it on the private market. For the past few years, private insurers have been pulling out of coastal areas, driving more and more homeowners into this insurance of last resort.
As of the end of October, nearly 59,000 FAIR Plan policies were in effect on the Cape and Islands, representing about 44 percent of the region's homeowners.
When the recent changes become effective, FAIR Plan wind deductibles will go from 1 percent of the insured value of the property to 2 percent for two groups of Cape homeowners: those located within a half-mile of the coast and insured for less than $200,000, as well as those located farther from the water and insured for less than $500,000.
Therefore, the wind deductible for a home on the Cape that is insured for $500,000 would go from $5,000 to $10,000.
On Nantucket and Martha's Vineyard, homes insured for between $200,000 and $599,999 will see their deductible go from 2 percent to 5 percent.
At the urging of state Division of Insurance officials, however, the FAIR Plan included provisions that allow policyholders to reduce or eliminate their wind deductible by taking steps to mitigate the risk to their home.
Because implementing some of these measures can be costly, Aschettino questioned whether these mitigation provisions would actually improve homeowners bottom lines.
"I don't know whether citizens really look at that as savings," she said.
Aschettino is also unhappy that Insurance Commissioner Nonnie Burnes approved the change in deductible without a public hearing.
The law does not require such a hearing, but Aschettino said that the public has a right to offer input on a change as significant as this.
"What really concerns us is the Division of Insurance allowing this to happen," she said. "I feel that we are speaking to deaf ears."
Kimberly Haberlin, spokeswoman for Burnes, said that such a charge does not accurately reflect the commissioner's role in the insurance market.
"The commissioner is very concerned about the burdens Cape residents are facing due to the current state of the homeowners insurance market," Haberlin said. "(She) is responsible for helping to create a healthy insurance market so, at the end of the day, companies can meet their obligations and keep their promises to their policyholders. Ensuring that a stable environment exists is in the best interest of all Massachusetts consumers."
Burnes was a member of the legislatively created special commission on homeowners insurance that recently recommended ways to combat the problem of rising insurance costs.
The commissioner's office also recently agreed to a meeting with Aschettino and state Sen. Robert O'Leary, who has been a vocal advocate of homeowners insurance reform.
"We just feel that the market on the Cape, it's just not functioning," said O'Leary. He would like, he said, "to remind (Burnes) of the impact that this is having, and that we see this as a rate increase for all intents and purposes. We'd like her to move more cautiously here."
Subscribe to:
Posts (Atom)