URBAN AREA INSURANCE PLACEMENT

M.G.L. pt. Part I, tit. Title XXII, ch. c. 175C

in effect

M.G.L. c. 175C, § 1 Definitions

c. 175C, § 1. Definitions Section 1. As used in this chapter, unless the context otherwise requires or a different meaning is specifically prescribed, the following words shall have the following meanings:— ''Commissioner'', the commissioner of insurance; ''Association'', the joint underwriting association described in section four. ''Basic property insurance'', insurance against direct loss to property as defined and limited in the standard fire policy and extended coverage endorsement thereon, filed with and accepted by the commissioner, and insurance against direct loss to such property from the perils of vandalism and malicious mischief and dwelling coverages, including liability coverage for non-owner occupied residential dwellings of 1 to 4 units either by endorsement or as a stand-alone policy; provided, that a completed and signed application for such non-owner occupied dwelling liability coverage submitted to the association shall constitute a certification by the applicant, or a duly authorized agent or producer submitting the application on the applicant's behalf, that the applicant has attempted to obtain non-owner occupied dwelling liability coverage in the voluntary market and has been denied non-owner occupied dwelling liability coverage by at least 2 insurers who provide such coverage in the voluntary market and homeowners coverages, including the scheduled personal property endorsement and such other coverages as the commissioner after public hearing shall determine or the Secretary of the United States Department of Housing and Urban Development shall designate by rule made in accordance with the provisions of the Urban Property Protection and Reinsurance Act of 1968 (Public Law 90–448) but shall not include insurance on automobile or manufacturing risks except such classes of manufacturing risks as may, after proper hearing, be designated by the commissioner. ''Large share territory'', any territory in which at least 7 per cent of the homeowners premium averaged over the most recent 3 calendar years was written by the association, with the specific percentage to be determined annually, such that the total homeowners premium written by the association in the preceding 3 years in large share territories as a percentage of the total homeowners premium written by the association does not exceed the percentage of the total homeowners premium written by the association in territories in which market share of the association equaled or exceeded 4 per cent in the 3 years immediately preceding 1996, pursuant to section 5; and such that in no event shall there be more than 13 large share territories designated in any given year. A territory cannot be a large share territory if the market share of the association in the territory is less than the market share of the association in another territory that is not a large share territory. ''Territory'', one of the standard statistical territories approved by the commissioner. ''Credit eligible territory'', any territory of the commonwealth in which at least twenty percent of the homeowners premium averaged over the most recent three calendar years was written by the association. ''Urban area'', any city or town, or streets or sections thereof, in the commonwealth so designated by the commissioner after appropriate hearing; ''Eligible applicant'', any person having an insurable interest in property eligible for basic property insurance; ''Reasonable insurable value'', a reasonable limit on liability for complete loss of the property insured; ''Premiums written'', gross direct premiums charged with respect to property in this state on all policies of basic property insurance and the basic property insurance components of all multiperil policies less all premiums and dividends credited or returned to policyholders or the unused or unabsorbed portions of premium deposits.

M.G.L. c. 175C, § 2 Repealed, 1996, 93, Sec. 7

M.G.L. c. 175C, § 3 Solicitation of business; inspection of records; compensation of agents

c. 175C, § 3. Solicitation of business; inspection of records; compensation of agents Section 3. No insurance company shall direct any agent or other producer not to solicit business through the association; no insurance agent shall direct any other agent in his employ or any broker or other producer not to solicit business through the association; and no agent, broker or other producer shall be penalized in any way by an insurance company or employer producer for submitting applications to the association. No insurance agent or broker licensed to sell basic property insurance shall be allowed to refuse a request for inspection from an eligible applicant for basic property insurance unless such applicant is: (a) Then indebted to any agent, broker or company for coverage requested; (b) Then unwilling to make satisfactory payment arrangements for the coverage requested. Agents and brokers submitting applications to the association shall be compensated by commissions upon the original issuance of coverage, each installment payment if any, and each renewal thereof and shall be entitled to no other compensation. Commissions to licensed insurance agents and brokers from the association established in accordance with the provisions of this chapter shall be set by the commissioner from time to time at such percentage of the average commission rate customarily paid by those insurance companies who customarily compensate agents by commissions, as the commissioner, after appropriate hearing, shall find to be sufficiently attractive to encourage agents and brokers to actively seek out risks and to assist property owners to obtain coverage while at the same time leaving a further incentive to the agent or broker to place such business through his customary markets when he finds that it is practicable.

M.G.L. c. 175C, § 4 Joint underwriting insurance; compulsory membership; powers; plan of operation; participation ratio; board

c. 175C, § 4. Joint underwriting insurance; compulsory membership; powers; plan of operation; participation ratio; board Section 4. (a) All insurers licensed to write and engaged in writing in this commonwealth, on a direct basis, basic property insurance or any component thereof in multi-peril policies, shall cooperate in organizing a joint underwriting association which shall provide basic property insurance to eligible applicants who are otherwise unable to obtain such coverage in the voluntary market. Every such insurer shall be a member of the association and remain a member as a condition of its authority to transact such insurance within the commonwealth. (b) Such association shall be authorized to inspect properties, issue policies, collect premiums and accept payment in installments under plans approved by the commissioner consistent with plans offered by voluntary market insurers, adjust claims and pay losses on behalf of its members, employ officers, agents and other employees, enter into contracts, sue and be sued in its own name and take all other actions necessary or appropriate to carry out its functions hereunder. (c) The association shall submit to the commissioner a proposed plan of operation, consistent with the purposes of this chapter, to provide for the prompt and efficient provision of basic property insurance to eligible applicants who meet reasonable underwriting standards and are otherwise unable to obtain coverage from insurers in the voluntary market. Such plan of operation shall provide for economical, fair and nondiscriminatory administration including, but not limited to, provisions for preliminary assessment of all members for initial expenses necessary to commence operations, establishment of necessary facilities, management of the association, assessment of members to defray losses and expenses, commissions, reasonable underwriting standards and limits of liability, purchase of reinsurance and procedures for determining amounts of insurance to be provided. (d) The plan of operation shall be subject to approval by the commissioner and shall take effect ten days after having been approved by him. If the commissioner disapproves the proposed plan of operation, the association shall, within thirty days, submit for review an appropriately revised plan of operation and, if the association fails to submit such a plan or if the revised plan is also disapproved by the commissioner, the commissioner shall promulgate a plan of operation consistent with this section. The association may, on its own initiative or at the request of the commissioner, amend the plan of operation, subject to approval by the commissioner. (e) (1) All members of the association shall participate in its writing, expenses, profits and losses in the proportion that the premiums written by each such member for basic property insurance, as defined in section one, except premiums for insurance on automobile and manufacturing risks excluded from the plan and that portion of the premiums attributable to the operation of the association during the preceding calendar year, bear to the aggregate premiums for such insurance written in the commonwealth by all members of the association. Such participation by each insurer in the association shall be determined annually on the basis of such premiums written during the preceding calendar years as disclosed in the annual statements and other reports filed by the insurer with the commissioner. (2) The participation of each member of the association writing personal lines coverage shall be adjusted based on the homeowners premiums written by such a member in any credit-eligible territory in accordance with the following clauses: (i) The participation ratio of each member writing personal lines insurance shall be recalculated, in accordance with the procedures set forth in subparagraph (1) but subtracting the premium written by members of the association writing only commercial lines insurance from the aggregate premiums written in the commonwealth by all members of the association. (ii) The participation ratio of each member writing personal lines insurance as recalculated in clause (i) shall be multiplied by the sum of the total premium written by the association in the commonwealth and the total industry homeowners premium written in credit-eligible territories, as defined in this chapter. (iii) In determining the total industry homeowners premium written in credit-eligible territories, premium written in the territory in which the association's homeowners insurance market share is largest shall be weighted at one. The weight assigned to premium written in other credit-eligible territories shall be calculated by determining the ratio expressed as a decimal, between the percentage market share of the homeowners premium written by the association in such territory and the percentage market share of homeowners premium written by the association in the territory in which the association's market share is the largest, and then rounding such ratio to the nearest tenth. All such calculations shall be based on an average of the premiums written in the three most recent calendar years. Weights calculated in accordance with this clause shall be adjusted whenever a territory becomes or ceases to be credit-eligible, or every three years if no adjustment has been made in the two preceding years. (iv) The product of the multiplication described in clause (ii) of this subsection shall be reduced by subtracting therefrom the homeowners premium written by each member in any credit-eligible territory adjusted in accordance with the weights set forth in clause (iii). (v) The result of the calculation described in clause (iv) shall be divided by the total premium written by the association in the commonwealth. The resulting ratio shall be the adjusted participation ratio for the member. (vi) The adjusted participation ratio of those members whose participation ratio is calculated as provided in this subparagraph shall apply to that portion of the writings, expenses, profits and losses of the association not recovered by applying the participation ratios of the remaining members of the association as calculated, as provided in subparagraph (1). (3) On or before November first, nineteen hundred and ninety-eight, the association shall file an amendment of the credit system applicable to homeowners insurance, as set forth in section four, for approval by the commissioner, who shall approve such a credit system effective on or before January first, nineteen hundred and ninety-nine, so as to award credits based upon homeowners premiums written in postal zip codes, rather than territories. The revised credit plan shall identify any credit-eligible zip codes by the percentage of the total homeowners premium written in such zip codes by the association, shall require a higher market share penetration by the association than set for credit-eligible territories, shall provide that the percentage of the statewide homeowners premium written by the association in such credit-eligible zip codes does not exceed the percentage of such premium written by the association in territories which are credit-eligible in nineteen hundred and ninety-seven and shall set forth the appropriate weights for such zip codes in accordance with the provisions applicable to weighting premium in credit-eligible territories. (4) The participation of any member of the association writing personal lines insurance shall be further adjusted if such member has written homeowners insurance during the preceding calendar year, hereafter called the ''base year'', on property that was insured by the association in the year immediately preceding such base year and which is located in any coastal territory in which the rate of increase in the market share of the association has exceeded sixty percent in the base year and in the preceding calendar year. The participation of such a member shall be adjusted by reducing the amount of premium written by such member in subparagraph (1) by twenty percent of the total homeowners insurance premiums written by the member on property described in this clause. Such adjustment shall not apply to any insurance written on property that was insured by the member or any affiliate or subsidiary member in either of the two years preceding the base year. (f) The association shall be governed by a board of eighteen directors, who shall serve without compensation, ten to be elected annually by the members of the association by cumulative voting, and two representatives of associations of insurance agents and brokers doing business in the commonwealth and six public representatives not affiliated with the insurance industry to be appointed annually by the commissioner of insurance. Cumulative voting by members shall be permitted at all such elections.

M.G.L. c. 175C, § 5 Powers of commissioner

c. 175C, § 5. Powers of commissioner Section 5. (a) The operation of the association shall be subject to the supervision and regulation of the commissioner. The commissioner or any person designated to act for the commissioner shall have the power to examine and investigate the operation of the association and shall have access to all the books, records, files, papers and documents that relate to its operations, may summon and qualify witnesses under oath, and may examine directors, officers, agents or employees or any other person having knowledge of the operations for the purpose of determining if the purposes of this chapter are being fulfilled. Notwithstanding any other provision of the General Laws, including clause Twenty-sixth of section 7 of chapter 4 and chapter 66, documents, materials or other information, including but not limited to, all working papers and copies thereof created, produced or obtained by or disclosed to the commissioner or any other person in the course of an examination made pursuant to this subsection or in the course of analysis by the commissioner of the financial condition or market conduct of the association shall be confidential by law and privileged, shall not be a public record under said clause Twenty-sixth, shall not be subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action. The commissioner may use the documents, materials or other information in the furtherance of any regulatory or legal action brought as part of the commissioner's official duties. Documents, materials or other information, including but not limited to, all working papers and copies thereof in the possession or control of the National Association of Insurance Commissioners and its affiliates and subsidiaries shall be confidential by law and privileged, shall not be subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action if they are: (i) created, produced, obtained by or disclosed to the National Association of Insurance Commissioners and its affiliates and subsidiaries in the course of the National Association of Insurance Commissioners and its affiliates and subsidiaries assisting an examination made pursuant to this subsection or assisting the commissioner in the analysis of the financial condition or market conduct of the association; or (ii) disclosed to the National Association of Insurance Commissioners and its affiliates and subsidiaries pursuant to this subsection by any member of the National Association of Insurance Commissioners. Neither the commissioner nor any person who received the documents, material or other information while acting under the authority of the commissioner, including the National Association of Insurance Commissioners and its affiliates and subsidiaries, shall be permitted to testify in any private civil action concerning any confidential documents, materials or information subject to this subsection. In order to assist in the performance of the commissioner's duties, the commissioner: (i) may share documents, materials or other information, including the confidential and privileged documents, materials or information subject to this subsection, with other state, federal and international regulatory agencies, the National Association of Insurance Commissioners and its affiliates and subsidiaries and state, federal and international law enforcement authorities provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material, communication or other information; (ii) may receive documents, materials, communications or information, including otherwise confidential and privileged documents, materials or information, from the National Association of Insurance Commissioners and its affiliates and subsidiaries and regulatory and law enforcement officials of other foreign or domestic jurisdictions and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information; and (iii) may enter into agreements governing sharing and use of information consistent with this subsection. No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the commissioner under this subsection or as a result of sharing as authorized in this subsection. A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established under this subsection shall be available and enforced in any proceeding in and in any court of the commonwealth. (b) The association may make rate filings in accordance with chapter 174A and chapter 175A; provided, however, that the filing shall be subject to the prior approval of the commissioner, after proper notice and hearing, subject to the adjudicatory procedures of chapter 30A; and provided, further, that in reviewing the rates for the association, the commissioner shall give consideration, in addition to all other relevant factors, to the loss experience of insurers in the voluntary market, as well as the experience of the association and to the intent of this chapter to make basic property insurance available at reasonable cost to eligible applicants in large share territories. (c) The commissioner shall approve all rates for the association for homeowners insurance in territories other than large share territories if the commissioner finds that the proposed rates for the territories comply with the requirements of the General Laws; but, the commissioner may disapprove the rate upon a finding that it exceeds a rate equal to the ninetieth percentile of the rates then in use in the territory by the 10 insurers with the largest market shares of homeowners insurance written in the commonwealth on a statewide basis. The commissioner shall approve all rates for the association for homeowners insurance in large share territories only if the commissioner finds that: (1) the proposed rates for the association for the territories comply with the requirements of the General Laws; and (2) no rate for the territory in any calendar year increases over the lowest rate for that product charged by the association during the prior calendar year in the territory by more than the overall statewide average percentage increase in rates charged from December 31 of the year preceding the prior calendar year to December 31 of that prior calendar year for homeowners insurance by the 10 insurers with the largest market shares of such insurance written in the commonwealth on a statewide basis. Notwithstanding clause (2), the commissioner shall consider the effects of predicted hurricane losses and the cost of catastrophe reinsurance on the rates charged by voluntary market insurers and the cost of catastrophe reinsurance and the predicted hurricane losses on the association approving rates for homeowners insurance in all territories. Whenever the average market share of the association during the most recent 3 years shall reach a level which newly qualifies a territory as a large share territory, the association shall analyze the rates of companies in that territory and shall file a report with the commissioner who shall, in turn, either re-certify the current rate or approve a revised rate for the territory filed by the association which bears a relationship to the rates in the voluntary market in the territory which is consistent with the average relationship between the rates charged by the association in all territories in which it has a similar market share and the rates in the voluntary market in those territories. As used in this subsection, the term ''homeowners insurance'' shall apply only to the types of products sold by the association on the effective date of this section. All other types of homeowners products subsequently sold by the association shall have a rate based on a factor approved by the commissioner that reflects the relative value of the coverage provided by the types of products to those for which rates have been approved by the commissioner.

M.G.L. c. 175C, § 6 Liability for operations of association

c. 175C, § 6. Liability for operations of association Section 6. There shall be no liability on the part of, and no cause of action of any nature shall arise against insurance companies, the association, or agents or employees thereof, or insurance agents or brokers using the, plan or association, or the commissioner or his authorized representatives, for any inspections undertaken, acts or omissions in connection therewith or statements made in any reports and communications concerning the insurability of the property, or at the time of any hearings conducted in connection therewith, or in the findings required by the provisions of this chapter. The reports and communications of the association shall not be considered public records.

M.G.L. c. 175C, § 6A Act or omission resulting in damage or injury; liability of director, officer, trustee or agent

c. 175C, § 6A. Act or omission resulting in damage or injury; liability of director, officer, trustee or agent Section 6A. No person who serves as a director, officer, trustee or agent of the association shall be held liable solely by reason of such service as a director, officer, trustee or agent for any act or omission resulting in damage or injury to another, if such person was acting in good faith and within the scope of his official functions and duties, unless such damage or injury was caused by willful or wanton misconduct.

M.G.L. c. 175C, § 7 Denial of association; review

c. 175C, § 7. Denial of association; review Section 7. The denial by the association of a part or all of the coverage requested by an eligible applicant, and any other decision requiring improvements to be made or loss prevention measures to be taken as a condition of providing basic property insurance shall be subject to review by the commissioner if an eligible applicant files an appeal with the commissioner within ten days of any such denial or decision. On receipt of any such appeal the commissioner shall cause an investigation of the facts to be made, shall grant all interested parties an opportunity to be heard and shall enter such finding, order or decision as he deems will best meet the purposes of this chapter. Any person aggrieved by any such finding, order or decision and any person aggrieved by any other rule or regulation of the commissioner made pursuant to this chapter may, within ten days of the filing of any such finding, order, decision, rule or regulation in the office of the commissioner, appeal therefrom to the superior court, for the county in which the complainant resides. The court shall, after such notice to the parties as it deems reasonable, hold a summary hearing on such appeal and shall have jurisdiction in equity to review all questions of fact and law, and to affirm or reverse such finding or order and to make any appropriate decree. The decision of the court shall be final and binding on all parties and may include such order as to costs as the court deems equitable.

M.G.L. c. 175C, § 8 Assessment of insurance companies for operating expenses

c. 175C, § 8. Assessment of insurance companies for operating expenses Section 8. (a) In order to carry out the purpose of this chapter the commissioner is authorized to assess each insurance company an amount in the proportion that the premiums earned in the commonwealth during the preceding calendar year by each such company in those lines of insurance which are eligible for reinsurance by the Secretary of the United States Department of Housing and Urban Development in the commonwealth during the current calendar year bear to the aggregate premiums earned in the commonwealth during such preceding calendar year by all such companies on such lines, sufficient to provide a fund to reimburse said secretary pursuant to the provisions of section 1223(a)(1) of the Federal Urban Property Protection and Reinsurance Act of 1968. Such assessment shall be made by the commissioner only after receipt and verification by him of a claim from said secretary and shall be due and payable to the commissioner on and after the forty-fifth day following the receipt by the commissioner of a claim from said secretary. (b) Insurers may add to the premium rate applicable to such lines of insurance on policies issued to be effective after the date of such assessment an amount, to be approved by the commissioner, sufficient to recover within not more than three years any amounts assessed under subsection (a) of this section during the preceding calendar year plus costs and expenses reasonably attributable to such assessment and recovery.

M.G.L. c. 175C, § 9 Market assistance plan; publication of availability

c. 175C, § 9. Market assistance plan; publication of availability Section 9. The association established pursuant to the provisions of this chapter shall prepare and submit to the commissioner of insurance a market assistance plan to assist applicants to obtain homeowners insurance in the voluntary market. All members of the association may, but shall not be required to, participate in the plan. The plan shall be approved by the commissioner if he finds that it is consistent with the purposes of this chapter and will assist applicants in obtaining insurance in the voluntary market. The plan shall provide that, upon request, any applicant or licensed broker on behalf of such applicant who contacts the plan shall be directed to an insurer which has elected to participate in the plan and shall be advised of an appropriate means to contact such insurer. Upon being contacted by the applicant or broker, the participating insurer shall evaluate the insurance risk posed by such application and may accept or decline to underwrite the insurance coverage. An insurer which declines to underwrite such coverage shall have the duty of informing the applicant and his broker of the process for obtaining coverage from the association. The association shall publicize the availability of the plan to insurance consumers and brokers in credit-eligible territories and all other areas in which the association believes that the availability of homeowners insurance is particularly constrained due to exposure to hurricanes or other catastrophic natural disasters.

Source: Massachusetts General Court (malegislature.gov)URL: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXXII/Chapter175CFetched: 10/20/2026