Commission Formed to Examine Availability and Affordability of Alabama Homeowners Insurance
Governor Robert Bentley is planning to call a special legislative session in January to address the affordability and availability of homeowners insurance in Alabama. Thousands in Alabama have lost their insurance due to recent catastrophes.
Initially, he named the panel the Governor’s Coastal Insurance Commission to examine the problem of purchasing homeowners insurance on the coast. After Hurricane Ivan in 2004 and Hurricane Katrina in 2005, many homeowners lost their coverage. According to the Governor, 13,000 people across the state lost their homeowners insurance. Coverage on a $200,000 home has risen to $7,000 a year in some areas. Before he finished naming the members of the panel, the tornadoes struck on April 27, 2011, killing 250 people. Tuscaloosa was one of the hardest hit cities, with 50 deaths.
Governor Bentley renamed the panel the Alabama Affordable Homeowners Insurance Commission and added members from throughout the state. It will be headed by county probate judge Tim Russell and will include State Insurance Commissioner Jim Ridling and State Revenue Commissioner Julie MaGee, along with 21 others.
The Alabama Insurance Underwriting Association, also known as the Alabama Beach Pool, provides coverage to those who cannot receive coverage elsewhere. According to their Web site, the number of policies in force has risen from just under 3,000 in 2004 to over 22,000 in 2011. The total insured value of the properties has risen from $337 million in 2004 to $3.9 billion in 2011.
One of the ideas from the Commission to address the problem is to form a captive insurance company that could accumulate reserves tax free. It would provide cheaper reinsurance to companies that cover Alabama homeowners.
Let us know what you think. What do you think the commission should focus on? Who should own the captive and manage it? Will they be able to solve the problem? What is the solution to the rising cost of insurance in Alabama and other states facing similar concerns?