MANY PEOPLE MAY NOT think of the insurance industry as one that sits right at the heart of some of the most important policy debates of our time. But Massachusetts insurance commissioner Michael Caljouw, in his role as the industry’s top regulator in the state, is weighing complicated tradeoffs around affordability and consumer protection, massive changes from the Trump administration, the rising cost of health care, and climate change.
Caljouw brings a long career in both the public and private sector to the role, where he oversees the nation’s 14th-largest insurance market with 1,500 licensed insurance companies collecting some $80 billion in premiums annually. The industry he’s regulating is going through seismic changes, as the state’s insurer-of-last-resort, known as the FAIR Plan, is insuring more flood-prone and risky coastal properties, health insurers seek rate hikes, and the Trump administration launches policies that undermine the funding for health programs on which Massachusetts residents have come to rely.
Caljouw sat down with CommonWealth Beacon to discuss how his office is navigating the shifting landscape. The following interview was edited for length and clarity.
COMMONWEALTH BEACON: I feel like most people in the general public might not know much about you or your role. What do you want people to understand about what you do?
MICHAEL CALJOUW: Our work centrally is important in terms of making sure that the licensees that we have in Massachusetts are solvent, whether that’s a home insurance company, auto insurance company, a health company or a life company, that we promote a healthy, responsive marketplace for consumers to shop in, and that insurers will be there to pay the claims when they come due.
A lot of the work that we do is not flashy; it’s behind the scenes. It’s really detailed financial review work that we do to really dig into the details behind insurance company finances, policies, and the rates that they offer to consumers to ensure that there’s a balanced and responsible playing field. The financial reporting that the companies do to us is a really important part of that job. We pore over the financial reports, [and] we go back and forth with the companies on issues that we may or may not agree with them on, in terms of making sure that we have a really firm grasp on the stability of the market.
I would argue it’s a level of review, that scrutiny, that would be really beneficial to other markets outside of insurance, say, for example, in the hospital and health system world, where we saw the Steward hospital crisis happen because we really weren’t able to get good information from the company on a timely basis. I think there are some lessons learned that I would love to see us continue to amplify.
The other part of the role, and I think it’s a really important one in terms of the time period within which I’m the commissioner, is affordability. There’s a central need for all of us in government to be watchful and to be on the lookout, to protect consumers at a time when costs are going up in every commodity, across the markets, not just in insurance. I come to that view with the goal of trying to be the voice for the consumer.
CWB: In the homeowners insurance market, we’ve seen a lot of change nationally with nonrenewals and rising premiums. Your most recent annual report found that the state’s FAIR Plan saw a significant increase in policyholders in 2024. How are you assessing the strength of that market, and does that cause any concerns for you?
CALJOUW: It’s important to underscore that insurance companies pick and choose the environments in which they offer products. Our Massachusetts homeowners market in particular continues to be very competitive. That doesn’t mean it’s a perfect market, and there’s definitely progress that needs to be made in certain areas.
But let me first give you the attractive part of the landscape. We have over 100 homeowners insurance companies now writing in Massachusetts. Just in 2021 that number was 90. So we continue to attract new market entrants to write homeowners insurance in Massachusetts, and we have not, by and large, experienced the withdrawals from the market that we’ve seen in other states nationwide. We also have a really healthy mix of national and local insurers. That’s also a … strength for Massachusetts so that we can build up some redundancy in terms of the options for consumers to choose homeowners insurance. We also have a really strong mix on market share. There’s not a predominant homeowners insurance company with more than 12 percent of the market, or somewhere in that range. That’s also a strength because we have a variety of choices.
Our team and I have met with a number of market entrants or other companies who have expressed interest in either expanding in Massachusetts or entering the Massachusetts homeowners insurance market. Most of that work needs to still remain confidential for now, but I can mention one important signpost, which is that State Farm will be entering the Massachusetts market in 2027, and that’s a strong sign that Massachusetts is an attractive market. State Farm was last in the Massachusetts market in the mid 2000s.
CWB: To what do you attribute that?
CALJOUW: I attribute it to ensuring that there’s an environment where there’s ample competition for consumers, where companies feel like the regulatory climate is a productive one. That really means that there’s a responsive dialogue in terms of anything that the insurance company is bringing to the market. I’m proud of that. I think that a responsive regulator is really one of the important parts to creating a dynamic landscape. The other issue is, I think, that there’s opportunity in Massachusetts compared to other states. Said a different way: I think other state market conditions may have worsened, and so Massachusetts has become a more attractive opportunity for companies to come in to do business in terms of the risk that’s being written.
Is the FAIR Plan increase in population a positive? No, it’s not a net positive thing. The FAIR Plan was never intended to be a competitor to the market. And I think generally, depopulation of the FAIR Plan is a good thing.
I also think that there are other potential market entrants that have shown interest, for example, in writing coastal risk that we’ve been talking to recently. We can’t go into too much detail on that, but those are also really positive signs. It’s a much better thing for the commercial market to be the first line of writing for a risk than the FAIR Plan, and I’d like to see improvements in that area, and I think there are some reasons for optimism on that score.
CWB: The FAIR Plan is eligible to file for a rate increase this year if it chooses to do so, something that hasn’t happened for 20 years in Massachusetts. Do you expect them to do that in the near future?
CALJOUW: We would respond to our rate filing if it were made, and it would go through a process of review. There’d be, for example, a public hearing on that rate. I don’t expect there to be a rate filing in the short term, but I would refer back to the FAIR Plan for more detail on that conversation.
CWB: Do you think their rates are actuarially sound?
CALJOUW: I’d probably have to punt on that because of the fact that I may have a case in front of me at some point. We would make sure that any rate filing was actuarially sound.
CWB: Is there anything more that could or should be done to prod insurers to lower premiums when homeowners in riskier areas take tangible steps to boost the resilience of their property in a way that substantively reduces that risk?
CALJOUW: It’s a great question. We need to do a better job — by we, I mean the insurance companies, the state, the federal government — in terms of educating homeowners. The basic understanding of risks to someone’s home is generally not strong, and that means we need to do a better job of explaining what actions people can take to protect themselves against or lessen the risk of future claims. The best insurance is avoiding the claim in the first place. I think people kind of know about that with regard to their own health, and they may not take that advice. I may not go to the gym, but I know that I should. I don’t smoke, and I know that that helps me. I get vaccinated, that helps me. Well, I think a homeowner could really benefit from understanding in a better way what tangible steps they could take to help protect their home, to prevent a claim happening in the future.
We need to help prod people to do that, though, and one of the ways that we can do it is to first of all, educate them on the specific mitigation measures that they can take. We have on the website a resilient homes page that lists those topics like hurricane straps, tie-downs to the home, different roofing materials that I think are really important to help build out the protections, but [there should also be] financial incentives back to the consumer so that they take those steps.
CWB: And that would probably require legislation, right?
CALJOUW: Many companies do it now, and we’ve been proud to work with the climate chief and others in the Healey-Driscoll administration around this. I think there’s more we can do without even legislation here, and we will continue to work so that all the companies offering homeowners insurance in Massachusetts have some level of financial protection. That could be a deductible waiver, it could be a premium discount, it could be any number of things, but I think we need to do a better job of giving people direct relief so that they take the action.
CWB: Let’s move on to health care. Health and Human Services Secretary Robert F. Kennedy, Jr. just announced a compliance review into states including Massachusetts for requiring insurers provide abortion care. What more can you share about that? Are you cooperating with that review?
CALJOUW: I would defer to the statement that the governor made on the topic. I’m respectful of the process.
CWB: Switching gears, where are you in your process for eliminating certain prior authorizations, which Gov. Maura Healey announced earlier this year?
CALJOUW: We’re currently in the middle of reviewing all of the written and oral testimony provided by the parties. There were over 50 submissions for our consideration, which is a lot comparatively on the topic. And there were people that told us that we didn’t do enough, other people that told us we did too much. I think it’s fair to say that we will continue to review those with a fine tooth comb, and we want to coordinate in terms of when we arrive at that decision point, but we’re not quite there yet.
CWB: You had said on The Codcast that you expect regulations sometime between late winter and early spring. Is that still accurate?
CALJOUW: That’s still a fair timeline.
CWB: Health insurers denied 20 percent of claims in 2024 in Massachusetts, 80 percent of which were for “administrative” reasons. Is that acceptable to you?
CALJOUW: The health landscape overall is increasingly heated, both in terms of the submissions coming in as well as the denials going back out. And my observation is that there are a number of reasons for that phenomenon. It concerns me when that behavior affects patients, and I think that’s sort of my guidepost for action. Now that does not necessarily mean that the denials are incorrect, because there are times when the denial actually protects the patient from a fee or a charge that they shouldn’t be getting, or otherwise affects the increase in premiums over time because if there are charges that are inappropriately being billed, if those are being netted out through this process of review, that’s benefiting the overall premium platform. I think that there are a few reasons why this might be happening.
One is, I think that now, more than ever, every dollar counts in the health care system. That’s because of a range of phenomena, including the restrictions on dollar flows coming out of President Trump and the White House in terms of funding for state programs, which has a cascading impact on hospitals and health centers in Massachusetts, where they are fighting for every dollar.
There’s also, I think, an increased prevalence through the use of artificial intelligence in terms of coding for the claims that are coming in and the rejections of the claims coming back. So, in some ways, we’re in the middle of an AI war here, and again, as the dust settles, our job at the DOI is to make sure that the patient’s not caught in the middle of that war.
CWB: There were some pretty significant rate hikes in the merged market last year, and your office actually rejected two of the eight rate hike requests that were filed. Are you gearing up for a second wave of that this year?
CALJOUW: I want to be careful because the rates have not yet been filed with us at the Division of Insurance. We’ll scrutinize any rates that get filed with us the way that we did last year through a strong, actuarially grounded approach that balances the need for reasonable rates with consumer affordability. Last year, I think we landed in a really good place. I expect that we’ll have to continue that work again. It’s not like this is magically going to go away, but I think it’s premature to predict any particular action.
I grew up in a time period of hyperinflation in the 70s and early 80s, and I’m acutely aware of the impact that costs can have, particularly costs that one can’t prepare for. I bring to the construct of reviewing products and rates that mindset of everyone’s trying to get by, and I think it’s really important that they understand that the work that we do is dedicated to trying to land in a better place on rates overall with an eye towards affordability. Many of those issues are outside of the control of the state regulator, but their impacts are being felt directly, and it’s a difficult time for consumers. I think we have to be on the watch for them.
CWB: I wanted to ask you about the massive federal changes with respect to Medicaid cuts and the expiration of Affordable Care Act tax credits, where the governor for instance announced $250 million for people utilizing the Health Connector to avoid premium increases. That’s welcome news for those people, but it is also a short-term fix. What is in your policy toolkit here to address these federal changes?
CALJOUW: I think the impact of the changes coming out of the Trump White House is immense, and that will have a cascading impact on the commercial market. My colleagues in the Healey-Driscoll administration and myself — our eyes are very much open to helping to protect against that through what you mentioned as a short-term intervention, but also long-term ideas. We just started to meet through this affordability work group, and I think that affordability work group will bear some fruit in terms of some of those long-term ideas. Certainly can’t predict any particular actions, but the right people are at the table. I continue to be sort of a blunt optimist, and I am a blunt optimist in that regard.