A year after Allstate Insurance Co. announced it would stop writing new homeowner”™s policies in Connecticut, the state cleared the hurricane season with no “Long Island Express” to show for it.
In a report issued one year ago this week, the Connecticut Department of Insurance said an “availability problem” exists for homes in proximity to the coast and that the market needs to be addressed before the situation worsens.
At the time, agents told state investigators it is very difficult to find homeowner”™s insurance for people living within 1,000 feet of the coast, and the trend was progressing inland. In addition, some underwriters told agents they are not writing coastal policies, in violation of their approved guidelines.
One year later, several Fairfield County executives have privately said their renewal rates were up significantly this year, with no choice but to absorb the increases.
Under a new state law, insurers no longer may refuse to issue or renew a homeowner”™s insurance policy solely because a building lacks permanent storm shutters. However, insurers are allowed to offer “actuarially sound” discounts off their premium to homeowner”™s who install such shutters or impact-resistant windows.
In a highly public spat last fall, Attorney General Richard Blumenthal stared down Andover Companies after the Massachusetts carrier attempted to force homeowners to purchase hurricane shutters as part of their policies.
The law also authorizes the insurance commissioner to establish a Coastal Market Assistance Program (C-MAP), a voluntary network of insurers setting rates under the guidance of the insurance commissioner.
To date, the Department of Insurance has yet to announce specifics of a C-MAP plan; spokeswoman Dawn McDaniel said the agency expects a plan to be finalized by March.
Under previous state law, insurance companies had been prohibited from refusing to issue homeowners policies as a general practice based on the building”™s location. However, half a dozen companies have obtained so-called coastal exception plans that allow them to place underwriting restrictions or coverage requirements for such properties.
Some $6 of every $10 generated in Connecticut homeowner”™s insurance premiums comes with mandatory requirements, largely related to hurricane shutters that protect windows and required flood insurance riders.
Some carriers require properties in flood zones to carry a separate flood policy, and many offer deductibles to offset the increased premium policyholders near the coast are paying.
Like many other states, Connecticut offers a Fair Access to Insurance Requirements (FAIR) plan designed to provide basic coverage to those property owners unable to obtain it in the standard market; homeowners who want more comprehensive coverage must deal with surplus lines carriers, which typically have higher rates.
The Connecticut Department of Insurance monitors the FAIR plan and the surplus markets as weather socks of sorts gauging insurance availability, and say neither market has had a significant increase in business.
The department also says it receives few homeowner complaints about the availability of coastal policies. Between August and December 2006, it received just 40 complaints regarding coastal coverage issues, a slim fraction of the state”™s total coastal population.
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