Governor Robert Bentley on Wednesday released the Affordable Homeowners Insurance Commission Report, which includes recommendations that could be used to address the availability and rising cost of homeowners insurance.
Governor Bentley created the Coastal Insurance Commission by executive order in April of 2011 to address the insurance needs of Alabamians living along the Gulf Coast, which is vulnerable to tropical storms and hurricanes. In the wake of the April 27, 2011, tornado outbreak, the commission's mission was expanded, and the Affordable Homeowners Insurance Commission was created to take a statewide approach to addressing insurance needs. Commission members studied various issues related to a lack of affordable and comprehensive homeowners insurance in some areas due to natural disasters.
"Homeowners insurance reform is a complicated issue, and I appreciate the time and sacrifice each commission member gave to address insurance needs," Governor Bentley said. "The result is a comprehensive set of recommendations. We will now evaluate these recommendations and study their feasibility. Our goal is to help make homeowners insurance more available and more affordable, and we will move forward with the recommendations that best help us accomplish this."
The commission was chaired by Baldwin County Probate Judge Tim Russell and included 28 other members. Commission members researched issues affecting homeowners by examining past insurance reports and talking with experts in the insurance industry. The commission held listening sessions at five locations throughout the state to hear directly from citizens. Other experts from the fields of insurance, risk management and disaster mitigation met with commission members to generate best practices, research, models and insurance options for the report.
Report recommendations for consideration include:
(1) Create an Alabama Center for Insurance Information and Research
(2) Dedicate $100 Million of Restore Act funds to mitigation efforts
(3) Improve building codes
(4) Collect and publish data that will help consumers select an insurance plan with the best coverage and price
(5) Require one state agency to be responsible for collecting construction data information across Alabama
(6) Consider creating a multi-state compact to spread risk across state lines
(7) Direct the Department of Insurance to examine its consumer affairs division and identify areas for improvement
(8) Further educate and discuss proper valuation of homeowners' policies
(9) Reintroduce insurance bills from previous legislative session(s)
(10) Explore additional legislation to:
i. Amend existing homeowners captive insurance statutes
ii. Encourage private insurance carriers to write policies currently covered under the Alabama Insurance Underwriting Association (AIUA)
iii. Encourage alternative insurance market products (e.g. high-deductible policies with low premiums and a catastrophic backstop)
iv. Allow for the sale of policies with an insured value that is less than the replacement cost and that will cover the amount of debt on the insured home.
(11) Direct AHIC to study the rate hearing process and the potential for mandating a public hearing by the Department of Insurance Commissioner if the homeowner's premium rate equals or exceeds a specified percentage increase.
(12) Ask the Alabama congressional delegation to organize a group of insurance representatives and advocates to study and form solutions for multi-state issues.
(13) Form a Multi-State Insurance Alternatives Advisory Committee with insurance representatives and consumers
"I support the creation of a center for research and excellence to be used as a statewide source of information for insurance needs and reforms," Governor Bentley said. "The center could provide education programs to develop innovative approaches to solving problems associated with insurance issues. Similar centers exist around the country, and I support the creation of one in Alabama to research and address specific insurance needs of people statewide."
"A key to lowering homeowner's insurance costs on the coast is to reduce the damage to homes from storms. A major priority is to fortify homes by providing mitigation grants to eligible homeowners in coastal counties," Governor Bentley added. "I will work with the Restore Act Council to find money available for the mitigation grants for coastal counties."
"On behalf of the commission members, I am honored to release our final report of recommendations to the Governor," Baldwin County Probate Judge Tim Russell said. "We appreciate Governor Bentley choosing us to serve as members of this very important commission and to provide recommendations that may improve the insurance environment in Alabama. We commend the Governor for his leadership in addressing the challenges that are before us and thank him for this opportunity."
"The Alabama Department of Insurance was pleased to be a part of the Affordable Homeowners Insurance Commission process," Alabama Department of Insurance Commissioner Jim Ridling said. "We served as a resource for commission members, helping them understand the homeowners insurance marketplace and the department's role in insurance regulation."
"With the success of the insurance reform bills passed in the Legislature in 2012, and with the continued pursuit of mitigation grants, homeowners in Alabama will have more options to reduce insurance costs," Governor Bentley said.
The full report can be found here http://www.aldoi.gov/PDF/Misc/AHICReport.pdf