Multi-State Coastal Band Wind Insurance Pool Among Alabama Governor’s Coastal Insurance Working Group Solutions to ‘Functionally Uninsured’
Nov 9, 2015
Creation of a “Coastal Band” wind insurance pool comprising states from Texas to Florida is among the solutions being considered by Alabama Governor Robert Bentley’s Coastal Insurance Working Group as it nears its December 31, 2015 deadline to submit recommendations on how to address Gulf Coast property insurance issues.
Concerns are that this and other proposed changes to the existing Alabama Insurance Underwriters Association (“AIUA”) don’t go far enough toward easing the cost burdens for both businesses and homeowners, many of whom are “functionally uninsured” because of high deductibles.
The Langniappe Weekly news reported that, as of this week, the Coastal Insurance Working Group’s proposal would change the way the AIUA operates, making it a tax-exempt organization. Currently, the AIUA writes 32,000 policies for $5.6 billion in total insured value-a 20 percent market share in Alabama’s Mobile and Baldwin counties.
Owned by the property insurance industry, the AIUA has about $82 million in capital and equity with $5.5 million in retained surplus. The remaining money belongs to the insurance companies with which the AIUA contracts. In the newest proposal, those insurers would be asked to leave that money in the AIUA and allow it to accumulate when hurricanes don’t hit the state.
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The Coastal Insurance Working Group is reviewing the possible creation of four types of tax-exempt entities that would:
1) Serve Mobile-Baldwin only and be a) an insurance entity, b) Standard Reinsurance Fund, or c) a 100 percent reinsurance fund;
2) Serve Alabama only and be a) an insurance entity, b) Standard Reinsurance Fund, or c) 100 percent reinsurance fund;
3) Serve multiple states, involving either a) the entirety of those states or b) the coastal zones of some states and be a) an insurance entity, b) standard reinsurance fund, or c) a 100 percent reinsurance fund;
4) Serve the entire country as a) an insurance entity, b) standard reinsurance fund, or c ) a 100 percent reinsurance fund.
Currently, minutes and other meeting materials for the Coastal Insurance Working Group are being compiled and stored by a faith-based consumer group known as the “Homeowners Hurricane Insurance Initiative.”
To go directly to the Coastal Insurance Working Group meeting minutes page, click here.