GIVEN THE VOLATILITY of home insurance affordability and availability in other states around the country, a recent uptick in the number of Massachusetts homeowners enrolling in the state’s insurer of last resort has drawn attention to the strength of the market at home.

Last year, Massachusetts’s FAIR Plan saw its first single-year increase in home insurance policies issued since 2017, CommonWealth Beacon reported, and its largest single-year jump in two decades.

There were more than 173,000 properties insured by the FAIR Plan in 2024 — which is still shy of the 2007 peak, but well above the 158,660 enrollees just a year prior in 2023.

Insurance officials and experts emphasized that it’s not yet a moment of flashing red lights over one year of data, but the spike is capturing the attention of the industry as a sign of the increasingly extreme weather that makes more properties more risky and inflation that can drive up rebuilding costs.

What is the FAIR Plan?

In the 1960s, states started to establish Fair Access to Insurance Requirements (FAIR) Plans in their jurisdictions with support from the federal government to provide a backstop in urban areas hit hard by riots and deemed too risky to be insured by private companies. These plans, known as insurers of last resort, offered consumers another option while providing private insurers with federal riot reinsurance.

Today, nearly three dozen states and Washington, DC, have a FAIR Plan. Each state’s plan has their own regulations governing what kind and amount of coverage it can provide.

Over time, these plans have become particularly essential in providing coverage to parts of the country prone to natural disasters, where the potential for massive damages like roofs ripped off by high winds or homes completely flooded is higher. This shift has been stark in some states like California, which experienced a doubling in its FAIR Plan both in policies and the value of properties it insures between 2023 and 2025 as private insurers fled the state following devastating wildfires.

Massachusetts established its FAIR Plan in 1968. The plan grew from around 70,000 policyholders in 2000 to peaking at roughly 204,000 in 2007 and stabilizing between 150,000 and 200,000 over the last two decades. The plan caps coverage at $1 million per home, which can serve as an effective tool at blunting its potential exposures.

How Massachusetts got here

The increased FAIR Plan policies and rising home insurance prices in the private market across New England both reflect and tell the climate story, since insurers are the arbiters of risk.

Massachusetts homeowners who have been unable to purchase coverage in the private market can obtain coverage through the FAIR Plan. The New York Times reported last December that the Bay State has the fifth highest nonrenewal rate in the country behind states like Florida, which routinely see billions of dollars in damage from hurricanes. 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, was 1 in 9.

The trends in Massachusetts haven’t been nearly as catastrophic as in other states, but signs of change are emerging. The 2024 FAIR Plan surge is at least in part driven by high nonrenewal rates by private insurers in the state in 2023, which drove homeowners to seek out other insurance options.

Statewide, there were 3,483 policy nonrenewals in 2022, 1,300 of which were in coastal areas, according to a report released by Insurance Commissioner Michael Caljouw in November. 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.

The report also 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.

And 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.

Aside from the nonrenewals, higher private home insurance prices driven by climate risk and increased rebuilding costs due to inflation and tariffs could have made the FAIR Plan look more financially attractive to homeowners.

The financial impacts

But the increase in FAIR Plan policies — and the plan’s increasing exposure to vulnerable seaside properties — could have serious consequences because the impact of a major coastal storm would disproportionately deliver significant losses to one insurer, especially if these trends continue.

The FAIR Plan 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 — an expense private insurers could pass on to their customers.

Frank O’Brien, the plan’s general counsel, 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,” he 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.”