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COASTAL INSURANCE WORK GROUP MEETS
The Work Group held its first two working meetings August 31 and
September 1. State Senator Trip Pittman read a letter from
the governor tasking the Coastal Insurance Work Group to solve
the coastal insurance crisis. Early reports indicate all
members worked well together despite their disparate interests.
here to watch WKRG News5 report about the group featuring
comments from Michell Kurtz and Senator Hightower.
Each Tuesday afternoon this summer the Fairhope Museum of History offers its visitors a cup of Baldwin County Tea and a taste of Fairhope history. This week’s guest speaker gave folks a lesson on insurance rates along the coast. The Coastal Insurance Work Group aims to equalize homeowners insurance rates state-wide.
Years may go by before you need it, but chances are, if you live along the coast, you’ll eventually have to make an insurance claim. The common perception is that hurricane-prone counties like Mobile and Baldwin are higher risk areas for insurers. Michelle Kurtz with Coastal Insurance Work Group aims to prove that perception wrong to anyone that will listen. She said the rest of the state has reasonable insurance premiums, averaging just less than $1,000, but here on the coast it’s much higher.
“The big problem with that is that actually our losses are lower. Our coastal losses are lower than the losses inland,” Kurtz said.
Kurtz said premiums in the coastal counties are 300 to 600 percent higher than those inland. Tuesday, August 04, 2015 Kurtz brought her message to a roomful of locals at the Fairhope Museum of History. As one of the founding members of the Homeowners Hurricane Insurance Initiative (HHII), she was instrumental in getting the Clarity Act passed into law in 2012, requiring insurance companies to open up their books. Kurtz says what they revealed an eye opener.
“In 2013, coastal residents paid $338 million in premiums and they received back only $61 million in claims. That means in 2013 we paid an excess of $277 million and that was just in one year folks,” she emphatically told the audience.
State Representative Joe Faust and State Senator, Trip Pittman have been on board from the beginning and got the Bill pushed through the House and Senate. Kurtz said the next big step will be forcing insurance companies to bring their premiums in line.
“The industry and other non-profits are very adequately pursuing mitigation. Mitigation and public education are not on the table for this work group. What we’re going for is a significant reduction in premiums so that our premiums are equitable and the industry is healthy.” Kurtz explained.
The Coastal Insurance Work Group is hoping to spread the word and gather support through grass-roots efforts like the presentation today. To be a part of those efforts, you can sign up for their newsletters through the Homeowners Hurricane Insurance Initiative.
Another example of insurance company complacency and legislative
"We live in north Mobile County, in the City of Satsuma. We are a mile from the 1-65 cut off. We have never had a claim
for any weather related incident and the ONLY claim we have ever had was to a back yard shed and that was 20 years ago. We are insured through Farmers. When we first switched to Farmers because the premium was the most reasonable at the time it was just over a thousand per year. Each and every year the premium has increased and it now is just below $5,000. Our home is a 1979 ranch home with just over 1800 square feet. We have upgraded electrical, new roof, and new heat and air pump. We have no pool, no trampoline, no vicious dogs and no claims. We have a fire hydrant literally in the corner of our yard and a full time, staffed fire department less than one mile from our home. The police department is also less than a mile from our home. I called about our premium and they could offer something less, but the company was not licensed in Alabama and they explained something else about them - I looked them up and they did not have a great track record so we declined. We do have wind coverage, but we also have an astronomical "named" storm deductible. There was an addendum that changed our writing from hurricane deductible to named storm. I guess this is to make sure we have the higher deductible in the event that a storm is just a tropical storm or depression. Otherwise, our deductible is $1,000. Our home cost us a whopping $30,000 to build back in 1979 and our payments were never as much as our insurance premium is now. I know we would be unable to build back for that price, but over the course of the last ten years, we have paid out more in premiums with absolutely no claims in that period than our house cost us to build. My sister lives in Clarke County and had storm claims after Ivan and Katrina and a tornado and one water damage from a leak - she has had four claims in 10 years to our none. She has a home approximately the same age, size and construction. Her premium is $600 annually - !
ours is $5,000 and we are a mere 45 minutes away. We have attempted to find other coverage, but it seems that most companies limit their area
of liability and until a customer either quits paying, chooses another company or for whatever reason no longer obtains their insurance through
them, they have no available openings to insure other customers. We have attempted to swap to such companies as State Farm, Alfa, Nationwide,
but it seems their Mobile and Baldwin County quotas are filled. If I am going to pay for insurance we prefer a reputable company with a good
track record. There is absolutely no reason for our premium to cost as much as it does simply because we are in Mobile County and considered
hurricane prone. We are no where near the bay, gulf, river or stream. I have written to Governor Bently, provided a copy of our insurance bill
and very kindly received a standard letter back about how they were looking into the matter. I referenced the study concerning the inequities
in what was being charged versus what was claimed and the inequities in how they pulled only the data from the years of Ivan and Katrina for
Mobile and Baldwin and skipped the years of the tornadoes in Central and North Alabama - nada. It seems as if no one is paying attention. I
could self insure myself at this rate."
HELP HHII WAKE UP THE MEDIA
The local media, with a few exceptions, have given negligible
coverage to the lack of affordable homeowner's insurance and the
resulting human and economic crisis. It is essential that
they wake up and inform the community about the ongoing activity of the Coastal Insurance Work Group.
You can help by volunteering your service to HHII's media
committee. Learn more
INSURERS HAVE “MASTERED” CATASTROPHIC EVENTS
Extract from 2/17/2012 paper by J. Robert Hunter,
Director of Insurance
Consumer Federation of America
How is it possible that the property-casualty industry’s surplus would sharply increase as
the number and severity of catastrophic weather events also increases? The primary reason is
that the insurers have 'mastered' hurricanes by shifting the lion’s share of the risk and costs to
consumers and taxpayers. In other words, property-casualty insurers have paradoxically
emerged as masters of risk avoidance, rather than continuing their historic role of risk taking.
Read complete paper to understand how insurers have shifted risks and costs
associated with weather catastophes to consumers and taxpayers
Reinsurance does not raise policy prices
From Ratemaking Applications of Catastrophe Models, a presentation by Bob Fox, ACAS, MAAA
Managing Director, Aon Benfield
We think that reinsurance purchases increase
insurance premiums only because our profit
provisions don’t reflect the cat
risk that the
A rate incorporating the net cost of reinsurance and
a provision for retained catastrophe risk will always
be less than a rate adequate to support cat risk
One Reason why this Work Group is
Different from ones in the Past
There are several reasons why previous Commissions dealing with the coastal insurance crisis failed to do anything meaningful about bringing Mobile-Baldwin premiums down and making the insurance product useful again (normal deductibles like everywhere else). One of the reasons was that the last Commission would meet for a few hours one day, and then not meet again for long periods of time. They went three months or thereabouts on one occasion between meetings.
In contrast, the people on this new Commission or Work Group have been asked to work 6 hours a day, two days a week, weekly. The actual meeting schedule may not be exactly that, but the spirit of the schedule will be kept.
In addition, the overwhelming majority of the Commission wants to fix the crisis.
HHII WELCOMES SPEAKING ENGAGEMENTS
HHII can fully inform your community or fraternal organization,
or church group, small or large, about what is happening with
homeowners' insurance. The presentation can be as short as
ten minutes or as long and in depth as you would like.
Call 251-928-3430 if you know of any who would be interested.
DON'T DROP YOUR FIRE & THEFT INSURANCE!
HHII has heard reports of homeowners who have dropped
insurance coverage because of unaffordable premiums. HHII urges
homeowners to maintain mult-peril (fire & theft) coverage even if they
can no longer afford wind coverage.
This toolkit includes links to detailed information to help answer questions about the changes coming to the NFIP.
ACT-II was developed by Baldwin County pastors in conjunction
with Ecumenical Ministries, Inc. Together we work on a wide variety of
problems in both poor and affluent communities around the county. Our
mission is to develop leaders and empower people to take democratic
action to improve the quality of life in our communities using our
dialogue to action church-based model and principles.
History of ACT-II.
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