DON’T PULL THE FIRE ALARM YET, but new data on home insurance in Massachusetts is turning heads across the industry.

Massachusetts enrolled more than 173,000 policies in its insurer of last resort, known as the FAIR Plan, in fiscal year 2024 — marking the first year-over-year increase for the insurer since 2017 and its largest single-year jump since 2007. In fiscal 2023, the FAIR Plan enrolled 158,660 policies.

“Insurance numbers like these are the canary in the coal mine,” said Charlie Sidoti, a former insurance executive who now serves as executive director of the Cambridge-based nonprofit Innsure, which works with insurers and communities navigating climate risk. “It leads to all sorts of other things — property values dropping, tax bases eroding — which puts financial pressure on municipalities. Ultimately, it could lead to declines in bond ratings. It’s an early, leading indicator of the impacts of climate change flowing through the economy.”

Insurers around the country are adjusting to a warming world, rising seas, and more costly extreme weather events by canceling policies, issuing nonrenewal notices, and raising premiums in risky areas — and in some cases, exiting states altogether. The trend is creating massive disruptions in homeowners’ ability to afford and access insurance — which provides a crucial backstop in case disaster strikes — and threatens to negatively impact property values.

Massachusetts, officials and experts stressed, is in a much better place than other parts of the country. The state has a robust market with a number of private insurers offering coverage, though prices have surged throughout New England. And it isn’t suffering from an onslaught of disastrous hurricanes or wildfires like in Florida or California.

Still, signs of change are emerging.

The latest data showing the FAIR Plan increases, from the state insurance commissioner’s recently-released annual report, comes on the heels of Massachusetts’s having the fifth-highest nonrenewal rate in the country in 2023, according to a congressional investigation. That nonrenewal rate is driven by areas most vulnerable to severe storms: In Barnstable County, 1 in 16 policies weren’t renewed in 2023. In Dukes County, it’s 1 in 9.

Statewide, there were 3,483 policy nonrenewals in 2022, 1,300 of which were in coastal areas, according to the state division of insurance. The very next year, that number jumped to 9,248, including a more than tripling of nonrenewals in coastal areas. By 2024, total nonrenewals grew again to more than 13,000.

Though there are a few factors explaining the increase in FAIR Plan enrollees in 2024, the high nonrenewal rates in 2023 likely drove some homeowners to the state’s insurer of last resort. Insurance Commissioner Michael Caljouw’s report found that 14 out of the top 25 insurance companies in the state implemented measures over the past five years “that were intended to reduce their exposure to climate-related risks,” including by reducing coverage in areas near the coast.

Chris Stark, executive director of the Massachusetts Insurance Federation, said that global reinsurers — companies that provide insurance for insurance companies — sought to offload some of their riskier policies in the wake of mounting losses for several consecutive years from natural disasters around the world. Massachusetts, a state in which it’s expensive to rebuild, has seen the number of heavy downpours increase 71 percent between 1958 and 2010.

About 4 in 10 homes on Cape Cod and the islands are now insured through the FAIR Plan — up from 33 percent in 2023. That represents the highest rate for the region since 2017. The coastal Bristol and Plymouth counties, together with the Cape and islands, accounted for about 51 percent of all FAIR Plan policies in 2020. Now, those regions have about 55 percent of all FAIR Plan enrollees after modest upticks in each of the past five years.

“Over the years, we’ve morphed from primarily an urban plan to now a coastal plan,” said Frank O’Brien, the FAIR Plan’s general counsel.

Such a change has consequences for the severity of risks and damages for which the plan has to contend.

“It’s just a huge concentration of risk that’s ultimately backstopped by the taxpayers of the Commonwealth,” said Andrew Gottlieb, executive director of the Association to Preserve Cape Cod. “And depending on the size of the next catastrophe, that may not be feasible. It’s going to be a burden on the state’s budget.”

Other changes aside from the nonrenewal rates may have led to the increase in FAIR Plan policies. Rising home insurance prices in the private market driven by climate risk and high rebuilding costs due to inflation and tariffs have made the FAIR Plan look more financially attractive, especially to lower and moderate-income households, Stark said. The FAIR Plan hasn’t raised rates since 2006.

FAIR Plans sprung up around the country in the 1960s in response to, at the time, rioting in American cities that exploded into mushrooming property damages and losses, with Massachusetts’s plan established in 1968. In more recent decades, though, these plans increasingly became focused on properties vulnerable to extreme weather events, like floods that damaged basements and high winds that tore through roofs, as private insurers raised rates and pulled coverage from these areas.

The Massachusetts FAIR Plan writes its own coverage policies and collects premiums, but it also has the ability to levy an assessment against private insurers when massive losses stack up. An assessment, which needs approval from the state insurance division, would force private insurance companies in the state to pay the FAIR Plan money to meet its claims and continue providing coverage.

While one year of insurance data may be enough to raise eyebrows, it’s not yet prompting a panic.

There have been more FAIR Plan policies in the past than there are today. In fiscal year 2007, there were about 204,000 policies overall in Massachusetts, compared with the roughly 173,000 last year, and when Superstorm Sandy hit in 2012, there were about 10,000 more policies on Cape Cod than there are now.

While every Massachusetts county experienced year-over-year growth in FAIR Plan policies between 2023 and 2024 — Worcester saw the largest, a 25 percent spike — the fact that the number of policies statewide has remained roughly between 150,000 and 200,000 for two decades is a testament to the state’s “robust” home insurance market, Stark said.

Massachusetts’s FAIR Plan also isn’t nearly as strained as plans in other states are. Texas’s insurer of last resort doubled its exposure from $113 million to $237 million and added 41,000 policies just between 2023 and 2024 alone. California’s FAIR Plan, meanwhile, doubled both in policies and the value of properties it insures between 2023 and 2025 as private insurers fled the state following devastating wildfires.

And the rise in FAIR Plan policies in the Northeast last year wasn’t confined to the Bay State. Neighboring New York and Rhode Island saw FAIR Plan increases in 2024 by 7 and 19 percent, respectively, compared to Massachusetts’s 9 percent growth.

“It was disturbing to see this pretty significant spike,” said Jonathan Schreiber, associate vice president of state government relations at the American Property Casualty Insurance Association. “But this is one year, so we need more data to understand if this is a new trend. Climate change is certainly here to stay, but there are other economic factors that hopefully can improve, as well as steps communities and individual homeowners can take to mitigate climate risk.”

Now that private insurers have made moves to rebalance their risk portfolios, Stark is hopeful that the 2024 growth in FAIR Plan policies proves to be more of a blip and that the market will stabilize in the years ahead.

“We’re not Louisiana or Florida or California in terms of what the homeowners insurance market is looking like right now,” Stark said. “But we also don’t want to see this trend of year-over-year growth in the FAIR Plan continue.”

Despite the relative health of the Massachusetts home insurance market, the thought of a catastrophic storm battering the Bay State’s shores — something it has largely avoided in recent history — still keeps insurance experts on guard, particularly with the FAIR Plan increasingly exposed on the coast. O’Brien said it’s unlikely at this time that the FAIR Plan would need to issue an assessment to pay claims should damages pile up following such a severe storm.

“However, we’re weather-dependent. That’s the business of insurance,” O’Brien said. “You hope for the best, you plan for the worst, and at the end of the day, we’re taking on a risk that people can’t take on by themselves, so you just try to be prepared.”

The new data is prompting some to think about the mission of the FAIR Plan in the first place. Dominick Dusseau, research associate at the Falmouth-based Woodwell Climate Research Center, said the plan in some ways is trying to serve conflicting purposes: be both an insurer of last resort for homeowners rejected by the private market and provide affordable coverage.

When the FAIR Plan is competitive with private insurers, people will flock there, forcing the private market to spread risk over fewer people, raise rates, and reduce their coverage in certain areas — fueling a cycle that could push more people into the FAIR Plan, especially in the state’s most vulnerable areas, he said. A devastating storm could increase the potential for an assessment, which private insurers would pass on to their customers.

“It’s a scary thought,” Dusseau said.

Still, Dusseau said the state is doing a decent job at striking that balance given the number of private insurers still offering coverage in Massachusetts. And he credited the FAIR Plan’s coverage cap of $1 million per home as an effective tool at keeping its potential exposures in check, given the otherwise high cost of rebuilding some of the more lavish properties dotting the coast.

But the future impacts of climate change will test the state’s insurance system and have implications for where and how to build for decades to come.

“Like a lot of things that were developed to respond to one set of circumstances, the FAIR Plan is not necessarily so well-tuned to apply to the rapidity of change that we’re seeing in climate and the huge increases in risk profile,” said Gottlieb of the Association to Preserve Cape Cod. “What you’ve got happening here is a massive shifting of the risk and the cost associated with remediating the risk when the storm hits to the public sector.”