We wrote in the June issue about the seven insurance bills passed by the Alabama Legislature in the Regular Session this year. That was a good start in the movement designed to protect state property owners. But Gov. Robert Bentley believes more work needs to be done. At a news conference on June 13th, Gov. Bentley said he hopes to use money from the Restore Act to help homeowners pay to retrofit houses to make property safer from storms and to reduce insurance rates. Governor Bentley said he understands that there is a difference in rates being charged to coastal property owners. He pointed out that the insurance companies are charging coastal homeowners and businesses much more for identical coverage as compared to premiums charged in other parts of the state.
The rate unfairness especially hurts working men and women and retirees in counties like Mobile and Baldwin. Many in those counties have insurance rates so high they can’t afford them. It was noted that higher insurance rates are one of the biggest obstacles to economic recovery on the Gulf Coast. It’s obvious that while the bills passed are good and a step in the right direction, more needs to be done.
The Governor said a special commission on insurance is scheduled to complete a report with recommendations on additional reforms in about one month. Baldwin County Probate Judge Tim Russell, a former state insurance commissioner, is chairman of the Governor’s Affordable Homeowners Insurance Commission. One possibility being studied would be to use about $200 million for a pool to help Mobile and Baldwin County property owners pay for damages after a disaster.
If the Restore Act passes in Congress – which is no certainty – some of those funds, paid by BP as compensation for oil spill losses, could help pay insurance costs. Gov. Bentley said that some of that money could also be used for a program similar to one in Florida, in which homeowners could be compensated for the cost of making their homes more storm-resistant. Retrofitting houses would also help reduce insurance costs by cutting the amount of claims. The Governor said the seven bills will give tax breaks to companies that provide insurance coverage in coastal areas and make insurance packages easier to understand.
Insurance companies will also have to provide the state Department of Insurance with information on the number of policies written, premiums collected and losses due to claims. Sen. Ben Brooks, R-Mobile, one of the sponsors of the insurance package bills, said the effort is a major start in insurance reform. He had this to say:
My view is that this is a really significant step in our long journey to a comprehensive reform package, the biggest single step in a year that we’ve had.
Hopefully, legislators in other parts of Alabama will realize that more needs to be done to help solve the insurance problems unique to the coastal communities. Gov. Bentley and the Legislature should be commended for what has been done so far. But they should finish the job when the next opportunity arises.
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