Special Reports on Massachusetts Homeowners Insurance

WILLIAM F. WELD GOVERNOR ARGEO PAUL CELLUCCI LIEUTENANT GOVERNOR COMMONWEALTH OF MASSACHUSETTS DIVISION OF INSURANCE 470 Atlantic Avenue • Boston, MA 02210-2223 (617) 521-7794 • FAX (617) 521-7770 TTY /TDD(617) 521-7498 LINDA RUTHARDT COMMISSIONER # DIVISION OF INSURANCE BULLETIN 96-11 TO: The Massachusetts Property Insurance Underwriting Association, the Twenty-five Company Groups with the Largest Shares of the Massachusetts Homeowners Market, and Statistical Agents for Massachusetts Homeowners Insurance FROM: Linda Ruthardt, Commissioner of Insurance Linda Ruthardt RE: Special Reports on Massachusetts Homeowners Insurance DATE: August 9, 1996 As a result of recent changes to Massachusetts statutes, there are new statistical reporting requirements that apply to the Massachusetts Property Insurance Underwriting Association ("FAIR Plan") and to each admitted insurer writing homeowners insurance in Massachusetts. Pursuant to these new requirements, the FAIR Plan and each admitted insurer, respectively, must annually submit to the Division of Insurance ("the Division") certain statistical information regarding its homeowners insurance experience. Compliance with these new requirements (specified below) is to be effected through statistical agents approved by the Commissioner of Insurance ("the Commissioner") to act on behalf of reporting insurers. In addition, the FAIR Plan and the twenty-five admitted insurers with the largest shares of the Massachusetts homeowners market, respectively, must submit, directly to the Division, reports on the number of cancellations and nonrenewals of homeowners policies each has effected in specified areas within the state. This bulletin describes the manner in which the new statistical reporting requirements for homeowners insurance will be implemented this year. Any changes in implementation that occur in the future will be addressed at that time by means of bulletins or other communications from the Division. We anticipate that all parties involved will make their best efforts to comply with the new requirements. 1994 and 1995 Calendar Year Data to Be Reported Through Statistical Agents by All Companies and the FAIR Plan The FAIR Plan and each admitted insurer writing homeowners insurance in Massachusetts must report to the Commissioner, by means of the approved statistical agent to which each respectively reports for homeowners statistical plan purposes, the following homeowners insurance data for the calendar years 1994 and 1995: written premiums; earned premiums; incurred losses, including loss adjustment expenses; loss ratio; number of incurred claims, and number of exposures. This data must be reported separately for the owners, tenants, and condominium forms of homeowners insurance. The statistical agents must also report aggregate cause of loss data. For formatting and other technical requirements that apply to these reports, including specification of the standard statistical territories, see the section, "Technical Requirements -- 1994 and 1995 Calendar Year Data Reports" (below). # Cancellation and Nonrenewal Data Required from the FAIR Plan and the Twenty-five Company Groups with the Largest Shares of the Massachusetts Homeowners Market The FAIR Plan and the twenty-five insurers with the largest shares of the Massachusetts homeowners market must report to the Commissioner the number of cancellations and the number of nonrenewals of homeowners policies each effected in calendar years 1994 and 1995 within the following geographical areas in Massachusetts: the areas corresponding to each of the postal zip codes applicable to the territories designated by the Commissioner as credit-eligible in accordance with Chapter 93 of the Acts of 1996; the areas covered by all other Boston zip codes, and the additional zip codes designated in this bulletin for this purpose. The twenty-five insurers with the largest shares of the Massachusetts homeowners market are defined for these purposes as the twenty-five insurance company groups with the largest shares of the Massachusetts homeowners market, as measured by statewide written premium for calendar year 1995. Reporting by such groups should include separate reports by each company within the group. The twenty-five largest groups are listed on Exhibit A. The zip codes are listed on Exhibit B. # Technical Requirements -- 1994 and 1995 Calendar Year Data Reports The 1994 and 1995 Calendar Year Data Reports by statistical agents must be made no later than September 5, 1996, for calendar/accident year 1994 and 1995 experience. The reports should be on a per company basis. The submissions must be provided as follows: on diskette; using the prescribed record layouts, in ASCII comma delimited format; named according to the convention set forth in Exhibit C, and directed to: State Rating Bureau Chapter 93 Data Collection Massachusetts Division of Insurance 470 Atlantic Avenue Boston, Massachusetts 02210-2223 If you should have any questions regarding these requirements, please contact the State Rating Bureau at (617) 521-7336. 2 The following data elements should be included in the submission. Refer to Exhibit D for the "statistical agent - by company" submission record layout. Company: Report the five digit NAIC company number. Territory: Report the appropriate two digit standard statistical territory code (refer to Exhibit E). Policy Form Group: Report "O" for owners forms, "T" for tenants forms, and "C" for condominium forms. Calendar/Accident Year: Report the applicable two digit calendar/accident year, i.e., 94 or 95. Written Premium: Report the premium amount for policies written during the calendar year. Earned Premium: Report that portion of the written premium amount which was in effect during the 1994 and 1995 calendar years for policies written since January 1, 1994. Report each year separately. No earned premiums should be included for policies written prior to 1994. Written Exposure (House-Years): Report the number of house-years for policies written during the calendar year. A house-year is defined as one house insured for one year, and is calculated based on the term of the policy. For example, a policy with a term of six months would be counted as 0.5 house-years. Earned Exposure (House-Years): Report that portion of the written house-years amount which was in effect during the 1994 and 1995 calendar years for policies written since January 1, 1994. Report each year separately. No earned house-years should be included for policies written prior to 1994. Incurred Losses, including all loss adjustment expenses: Report incurred losses including all loss adjustment expenses which occurred during the 1994 and 1995 accident years for policies written since January 1, 1994. Report each year separately. Incurred losses should be evaluated as of fifteen months from the start of the year. Losses which occurred during the year for policies written prior to 1994 should not be included. Incurred Claims: Report the number of incurred claims corresponding to the incurred losses reported. Loss Ratio: This is defined as the incurred losses including all loss adjustment expenses divided by earned premiums, rounded to three decimal places. # Additional Statistical Agent Requirements for All Insurers - Aggregate Data On or before September 5, 1996, the statistical agents are required to submit aggregate data by cause of loss for their reporting insurers. The following data elements should be included in the submission. Refer to Exhibit F for the "statistical agent - aggregate data" submission record layout. 3 Territory: Report the appropriate two digit standard statistical territory code (refer to Exhibit E). Policy Form Group: Report "O" for owners forms, "T" for tenants forms, and "C" for condominium forms. Calendar/Accident Year: Report the applicable two digit calendar/accident year, i.e., 94 or 95. Cause of Loss: Report the appropriate two digit cause of loss code (refer to Exhibit G). Incurred Losses, including all loss adjustment expenses: Report incurred losses including all loss adjustment expenses by cause of loss, for losses which occurred during the year for policies written since January 1, 1994. Report each year separately. Incurred losses should be evaluated as of fifteen months from the start of the year. Losses which occurred during the year for policies written prior to 1994 should not be included. Incurred Claims: Report the number of incurred claims corresponding to the incurred losses reported. ## Technical Requirements -- Cancellation and Nonrenewal Reports The cancellation and nonrenewal reports by the top twenty-five insurance company groups and the FAIR Plan for calendar years 1994 and 1995 must be submitted no later than September 5, 1996. The submissions must be provided as follows: on diskette; using the prescribed record layout, in ASCII comma delimited format; named according to the convention set forth in Exhibit C ('YYDCCCCC.ASC' where YY is the year of the experience period, D indicates cancellation/non-renewal submission, CCCCC represents the five digit NAIC company number); and directed to the State Rating Bureau (at the address stated above), to the attention of "Chapter 93 Data--Top Twenty-five Insurance Company Group." The diskette must be accompanied by a completed certification form of the type set forth in blank in Exhibit H. If you have questions regarding these requirements, please contact the State Rating Bureau at the number stated above. The following data elements should be included in the submission. Refer to Exhibit I for the "individual insurer - cancellation/non-renewal" submission record layout. Company: Report the five digit NAIC company number. Zip Code: Report the appropriate five digit zip code (refer to Exhibit B). Calendar Year: Report the applicable two digit calendar year, i.e., 94 or 95. Number of Policies in Force: Report the number of policies in force as of December 31 of the calendar year. 4 Total Number of Cancellations: Report the number of policies canceled during the calendar year. A cancellation occurs during the policy term. Total Number of Non-Renewals: Report the number of policies not renewed during the calendar year. A non-renewal occurs when a policy expires. Number of Insurer-Initiated Cancellations: Report the number of cancellations during the calendar year that were initiated by the insurer, excluding those canceled by the insurer for non-payment of premium. Number of Insurer-Initiated Non-Renewals: Report the number of non-renewals during the calendar year that were initiated by the insurer, excluding those non-renewed by the insurer for non-payment of premium. Note: Failure by an insurer to provide any of the above data items must be accompanied by a detailed explanation as to the reason(s) for that failure. 5 Exhibit A # Massachusetts 1995 Top Twenty-Five Groups by Written Premium Volume for Homeowners Multi-Peril Insurance - Aetna Life & Cas Grp - Allmerica P & C Cos - Amica Mutual Ins Co - Andover Ins Group - Arbella Ins Group - Chubb Grp of Ins Cos - Comm Union Ins Cos - Commerce Group, Inc - Fitchburg Mutual Ins - Harleysville Ins Cos - Hingham Mut Grp - Holyoke Mutual Ins - John Hancock Group - Liberty Mutual Group - Main Street Amer Grp - Metropolitan Group - NLC Ins Cos - Norfolk & Dedham Grp - Pawtucket Mut Group - Plymouth Rock Cos - Quincy Mutual Fire - Travelers Ins Group - Union Mut Fire Group - USAA Group - Vermont Mutual Group 6 Exhibit B # Massachusetts Zip Codes to Be Included in the Cancellation / Non-Renewal Reports | Zip Code | City/Town | Zip Code | City/Town | | --- | --- | --- | --- | | 02101 | Boston | 01840 | Lawrence | | 02102 | Boston | 01841 | Lawrence | | 02103 | Boston | 01842 | Lawrence | | 02104 | Boston | 01843 | Lawrence | | 02105 | Boston | 01901 | Lynn | | 02106 | Boston | 01902 | Lynn | | 02107 | Boston | 01903 | Lynn | | 02108 | Boston | 01904 | Lynn | | 02109 | Boston | 01905 | Lynn | | 02110 | Boston | 02138 | Cambridge | | 02111 | Boston | 02139 | Cambridge | | 02112 | Boston | 02140 | Cambridge | | 02113 | Boston | 02141 | Cambridge | | 02114 | Boston | 02142 | Cambridge | | 02115 | Boston | 02238 | Cambridge | | 02116 | Boston | 02143 | Somerville | | 02117 | Boston | 02144 | Somerville | | 02118 | Boston | 02145 | Somerville | | 02119 | Boston | 02150 | Chelsea | | 02120 | Boston | 02151 | Revere | | 02121 | Boston | 02152 | Winthrop | | 02122 | Boston | 02401 | Brockton | | 02123 | Boston | 02402 | Brockton | | 02124 | Boston | 02403 | Brockton | | 02125 | Boston | 02404 | Brockton | | 02126 | Boston | 02405 | Brockton | | 02127 | Boston | 02740 | New Bedford | | 02128 | Boston | 02741 | New Bedford | | 02129 | Boston | 02742 | New Bedford | | 02130 | Boston | 02743 | New Bedford | | 02131 | Boston | 02744 | New Bedford | | 02132 | Boston | 02745 | New Bedford | | 02133 | Boston | 02746 | New Bedford | | 02134 | Boston | | | | 02135 | Boston | | | | 02136 | Boston | | | | 02137 | Boston | | | | 02163 | Boston | | | | 02199 | Boston | | | | 02203 | Boston | | | | 02205 | Boston | | | | 02208 | Boston | | | | 02209 | Boston | | | | 02210 | Boston | | | | 02215 | Boston | | | | 02222 | Boston | | | 7 Exhibit C # File Naming Convention | Starting Position | Code | Definition | | --- | --- | --- | | 01 | YY | *Experience period* (e.g. 94 or 95) | | 03 | - | *Type of Submission* | | | A | By Company | | | B | Aggregate Data | | 04 | --- | *Name of Statistical Agent* | | | AAIS | | | | NAII | | | | NISS | | | | ISO | | | end | .ASC | *File extension* | Sample file name: '94BAAIS.ASC' Translation: (1994 data, aggregate data submission, reported by AAIS) Sample file name: '95BISO.ASC' Translation: (1995 data, aggregate data submission, reported by ISO) 8 Exhibit D # Statistical Agent Layout (All Insurers - By Company) | 1 | company number | | --- | --- | | 2 | | | 3 | | | 4 | | | 5 | | | 6 | territory | | 7 | | | 8 | policy form | | 9 | year | | 10 | | | 11 | written premium (whole dollars) | | 12 | | | 13 | | | 14 | | | 15 | | | 16 | | | 17 | | | 18 | | | 19 | | | 20 | earned premium (whole dollars) | | 21 | | | 22 | | | 23 | | | 24 | | | 25 | | | 26 | | | 27 | | | 28 | | | 29 | written exposure house- years (whole years) | | 30 | | | 31 | | | 32 | | | 33 | | | 34 | | | 35 | | | 36 | earned exposure house- years (whole years) | | 37 | | | 38 | | | 39 | | | 40 | | | 41 | | | 42 | | | 43 | incurred losses including all lae (whole dollars) | | 44 | | | 45 | | | 46 | | | 47 | | | 48 | | | 49 | | | 50 | | | 51 | | | 52 | incurred claims | | 53 | | | 54 | | | 55 | | | 56 | | | 57 | | | 58 | | | 59 | loss ratio | | 60 | | | 61 | | 9 Exhibit E # Massachusetts Statistical Territories | Territory Description (County/City) | Territory Code | | --- | --- | | Barnstable * | 37 | | Berkshire * | 50 | | Bristol (City of Fall River) | 32 | | Bristol (City of New Bedford) | 33 | | Bristol (Except Fall River & New Bedford) | 34 | | Dukes * | 37 | | Essex (City of Lawrence) | 38 | | Essex (City of Lynn) | 39 | | Essex (Except Lawrence & Lynn) | 40 | | Franklin * | 50 | | Hampden (City of Chicopee) | 48 | | Hampden (City of Holyoke) | 48 | | Hampden (City of Springfield) | 47 | | Hampden (Except Chicopee, Holyoke & Springfield) | 49 | | Hampshire * | 49 | | Middlesex (City of Cambridge) | 41 | | Middlesex (City of Lowell) | 42 | | Middlesex (City of Newton) | 43 | | Middlesex (City of Somerville) | 41 | | Middlesex (Except Cambridge, Lowell, Newton & Somerville) | 44 | | Nantucket * | 37 | | Norfolk (City of Brookline) | 12 | | Norfolk (City of Quincy) | 30 | | Norfolk (Except Brookline & Quincy) | 31 | | Plymouth (City of Brockton) | 35 | | Plymouth (Except Brockton) | 36 | | Suffolk (City of Boston - District A) | 02 | | Suffolk (City of Boston - District B) | 03 | | Suffolk (City of Boston - District C) | 04 | | Suffolk (City of Boston - Except Districts A, B & C) | 11 | | Suffolk (Except Boston) | 05 | | Worcester (City of Worcester) | 45 | | Worcester (Except City of Worcester) | 46 | * Entire County 10 Exhibit F # Statistical Agent Layout (All Insurers - Aggregate Data) | 1 | | | --- | --- | | 2 | territory | | 3 | policy form | | 4 | | | 5 | year | | 6 | cause | | 7 | of loss | | 8 | | | 9 | incurred | | 10 | losses | | 11 | including | | 12 | all lac | | 13 | (whole | | 14 | dollars) | | 15 | | | 16 | | | 17 | | | 18 | | | 19 | incurred | | 20 | claims | | 21 | | | 22 | | | 23 | | 11 Exhibit G # Homeowners Cause of Loss Codes | Cause of Loss Description | Code | | --- | --- | | Fire, Lightning, and Removal | 01 | | Wind and Hail | 02 | | Water Damage and Freezing | 03 | | Theft | 04 | | Liability and Medical Payments | 06 | | All Other | 09 | 12 Exhibit H # Certification for Data Submitted in Response to DOI Bulletin No. 96-11 I, _________________________, hereby certify as follows: (print or type full name) (1) I hold the position of _________________________ (title) in _________________________; (2) I am (company name) responsible for overseeing submission of homeowners insurance data by this company to the Massachusetts Division of Insurance in accordance with Chapter 93 of the Acts of 1996, and I am authorized to submit this certification on the company's behalf; and (3) to the best of my knowledge, information, and belief, the information contained in the attached diskette is true, accurate, and complete. Signed under the penalties of perjury this _________ day of _________, _________. (day) (month) (year) (signature) Full Business Address: _________________________ _________________________ _________________________ _________________________ _________________________ Telephone Number: _________________________ 13 Exhibit I # Individual Insurer Cancellation / Non-Renewal Layout | 1 | company number | | --- | --- | | 2 | | | 3 | | | 4 | | | 5 | | | 6 | zip code | | 7 | | | 8 | | | 9 | | | 10 | | | 11 | year | | 12 | | | 13 | number of policies in force | | 14 | | | 15 | | | 16 | | | 17 | | | 18 | | | 19 | | | 20 | total number of cancellations | | 21 | | | 22 | | | 23 | | | 24 | | | 25 | | | 26 | total number of non-renewals | | 27 | | | 28 | | | 29 | | | 30 | | | 31 | | | 32 | total number of insurer-initiated cancellations | | 33 | | | 34 | | | 35 | | | 36 | | | 37 | | | 38 | total number of insurer-initiated non-renewals | | 39 | | | 40 | | | 41 | | | 42 | | | 43 | | 14