Massachusetts insurance agent says rates could go up across country after California fires

NORWOOD – As harrowing images of homes burning to the ground come in day after day from California, Massachusetts homeowners are understandably questioning whether they are prepared and properly insured should a catastrophe hit our coast.

“There’s a ripple effect”  

“Whenever you see catastrophic losses like they’re seeing in California right now, there’s going to be ramification, repercussions across the country, if not across the world,” explained local insurance agent and former chair of the Mass. Association of Insurance Agents, Patrick Dempsey of Norwood.

“That could mean rates go up for people across the country, even though it’s not happening in our backyard. It’s happening to a market that’s going to impact ours here. So, there’s a ripple effect for sure,” he said.

Dempsey explained that insurance companies are not equipped to cover sudden losses of hundreds of billions of dollars, and in a time like we’re seeing in California, they tap into their own insurance companies in the “reinsurance” industry.

Fortunately for now, Massachusetts doesn’t seem poised to experience fires like the West Coast does as weather intensifies worldwide. “[Fires] haven’t really been prominent here, although we did have some this past year in kind of the Milton Blue Hills area there. There were legitimate forest fire concerns,” he said.

One huge challenge in California right now, Dempsey explained, is that the state “has been noted to go through some struggles in the recent past with certain larger carriers kind of pulling back in large scale.”

Massachusetts safety net

Since insurance is governed on a state level, Dempsey feels Massachusetts residents should be comforted by our state’s safety net. 

“I think it is a little bit of a feather in the cap for Massachusetts, that the Insurance Commissioner’s office and the companies work quite well together in the sense that they’re not taking aggressive rates that are unnecessary, but they’re keeping the companies in a way that they’re bringing enough premiums to pay out the claims. It’s a delicate balance,” he said. “Other states might be jealous of how well it’s being done right now, and I’m proud that that’s going so well in our state, so hopefully good things in the future.”

Dempsey’s advice to Massachusetts homeowners is likely not surprising, given that he is a local agent. He recommends staying local and using an agent to find the home insurance policy that’s right for you.

“When you deal with an agent, they can really take you through these steps, and they also know their backyard,” he said. “You know, if I’m writing a policy in Norwood, I’ll know when certain homes are going to be near, say, a brook or a stream that might put it in a flood zone.”