More insurers backing away from coasts
The hurricane anxiety of home insurance companies is starting to spread beyond Cape Cod and southeastern Massachusetts, creeping northward along the coast to Boston and the North Shore.
The level of angst is nothing like it is on the Cape, where many insurers have either pulled out or sharply restricted their underwriting in coastal areas, forcing more than 40,000 homeowners to scramble for coverage.
But some insurers are now retrenching along the entire Massachusetts coast, even in areas that are not considered likely targets for a hurricane's full brunt.
Maxine Tassinari Teixeira is one of the latest victims. She can't see the ocean from her East Boston home, but her insurer decided it didn't want to provide coverage within three miles of the coast, so it wouldn't renew her policy.
"I'm furious," Teixeira said. "There is a street, a cemetery, and a whole airport between me and the water."
Her insurer, Preferred Mutual Insurance Co. of New Berlin, N.Y., said it is scrutinizing its coastal exposure because its cost of reinsurance - the coverage insurers buy to protect themselves in case of a catastrophic event - has skyrocketed. "To our knowledge, all companies are assessing their coastal exposure and are taking the appropriate underwriting measures to meet their individual business needs," said Christopher H. Harris, director of marketing and field management at Preferred Mutual.
Conventional wisdom holds that a major hurricane approaching New England would come from the south and slam into the coasts of Connecticut, Rhode Island, and southeastern Massachusetts. The Cape and Islands would be particularly vulnerable.
A hurricane could steamroll across the Cape toward Boston and the North Shore or head inland, but industry officials say in that case the storm would likely lose much of its power and probably cause less damage.
Because of the Cape's perceived vulnerability, many insurers have retreated there, and homeowners have been left with no other choice for coverage than the Massachusetts Fair Plan, the state's insurer of last resort. The Fair Plan, which is operated as an independent insurance company but regulated by the state, now insures more than 40 percent of the homes on the Cape.
A widespread shift to the Fair Plan has not occurred in coastal areas of Boston and the North Shore. Insurance agents say some homeowners in Marblehead, Swampscott, and Boston have been told by insurance carriers that their policies were not being renewed, but the agents say most of those policies have been placed with other carriers with less restrictive underwriting criteria.
After Preferred Mutual told her it would not renew her policy, Teixeira found other carriers were willing to sell her coverage, some at lower rates than Preferred Mutual. She said she is leaning toward a policy with Liberty Mutual Insurance Co. of Boston.
Frank O'Brien, vice president and regional manager of the Property Casualty Insurers Association of America, said companies are adjusting their portfolios along the coast from Boston to New Hampshire to minimize their coastal risk, but they are not moving in lockstep.
While Preferred Mutual is not renewing policies within three miles of the coast, a spokesman for Liberty Mutual said his firm continues to write policies all over Massachusetts. He declined further comment.
A spokesman for Arbella Mutual Insurance said the Quincy company is not accepting new business within two miles of the coast on the Cape and within a mile of the coast off the Cape. Arbella imposes a 2 percent wind deductible, meaning the policyholder is responsible for the first 2 percent of any property damage caused by wind within two miles of the coast everywhere.
Premier Insurance of Worcester, which services the Massachusetts home insurance policies of its corporate parent, Travelers Indemnity Co. of Hartford, takes a slightly different approach.
According to Susan Scott, senior vice president and general counsel for Premier, Travelers is not accepting new business and not renewing existing policies within one mile of the coast on the Cape and within three-tenths of a mile on the North Shore.
On the Cape, Travelers applies a 5 percent hurricane deductible, which means the homeowner is responsible for the first 5 percent of any property damage caused by a hurricane. In Suffolk, Norfolk, and Middlesex counties, the deductible is 2 percent within two miles of the coast. On the North Shore, a 2 percent deductible applies between three-tenths of a mile and two miles from the coast.
Tim LaRovere, owner of the LaRovere Insurance Agency in Everett and chairman of the Massachusetts Association of Insurance Agents, said homeowners aren't being stranded in Boston and on the North Shore. "The reinsurers tell the companies that if they withdraw from the coast their premiums will be a lot less," said LaRovere.
Jack Golembeski, president of the Fair Plan, said his business in Boston and the North Shore hasn't increased significantly. "In most urban areas, we see business leaving" the Fair Plan, he said.
Coastal home insurance is under scrutiny on Beacon Hill. A legislative commission is investigating why so many companies have retreated from the coastal home insurance market, and Attorney General Martha Coakley last week called for massive reductions in the Fair Plan's rates.
The Fair Plan is seeking a 13.8 percent increase in its average statewide rate and a 25 percent increase on the Cape, the Islands, and much of Plymouth County.
Bruce Mohl can be reached at Mohl@globe.com
