Noting that insurers typically use models from Risk Management Solutions and AIR Worldwide to estimate expected hurricane losses, Coakley says, “The RMS and AIR models have significant shortcomings that unfairly raise rates for consumers.”

She says the RMS near term model used by insurers and reinsurers has been rejected for use by the Florida Commission on Hurricane Loss Methodology, and adds that “a recent five-year review of the near term models, including the RMS model, determined that these model predictions are well above insurer loss experience.”

Coakley also says the AIR model “has never been thoroughly reviewed by any regulatory agency here in Massachusetts or elsewhere to determine whether its estimates are accurate and suitable for use in the Commonwealth.”

Responding to the letter, Frank O'Brien, vice president and Northeast regional manager for the Property Casualty Insurers Association of America, says, “Frankly [the letter] is more of the same on the part of the Attorney General's Office: more grandstanding, if you will.”

O'Brien says he believes the letter was sent in response to a Massachusetts FAIR Plan request to increase rates. A hearing is scheduled for that request in December.

He says the attorney general's main problem is that her office has not been in a position to review and/or approve the models.

“The attorney general has long taken the position that the models that are currently in use nationwide are not good enough for Massachusetts or New England because they are based more on information in more hurricane-prone areas of country,” O'Brien says.

Paul Tetrault, Northeast region state affairs manager for the National Association of Mutual Insurance Companies, says the models are used by insurers to get the best estimates of exposures for catastrophic loss so that the company “is able to be there when a catastrophe happens” and have enough money to pay claims.

He says the models are widely used, and insurers generally use multiple models in most cases.

He criticizes the idea that insurers are intentionally charging higher rates, saying such an idea does not stand up in a competitive marketplace.

Tetrault also says the timing of the attorney general's letter is odd given the amount of weather losses insurers have faced this year, including events in the Northeast such as Hurricane Irene and the October snowstorm.