The state of Alabama is looking into legislation that could potentially lower the cost of homeowners insurance premiums in coastal areas around the region.
Senate Bill 298, proposed by Senators Bill Hightower and Trip Pittman, was introduced in the Alabama House and Senate late February. If approved, the bill would lead to the creation of the Alabama Coastal Insurance Authority (ACIA) that would help lower premiums for homeowners in Mobile and Baldwin. Rep. Joe Faust introduced House Bill 321 which was co-sponsored by House members representing the concerned regions.
According to reports by independent weekly news source Lagniappe, the legislation was the brainchild of the Coastal Insurance Working Group (CIWG)—a committee founded by Gov. Robert Bentley last summer that was tasked with coming up with viable solutions to the issue of rising insurance costs among homeowners in the state living along the Gulf Coast.
“The Coastal Insurance Work Group is an excellent example of our government, educated citizens and private industry working together to solve our community’s problems,” said Earl Janssen, CIWG co-chairman and a member of the Homeowners Hurricane Insurance Initiative.
If enacted, the legislation would exempt the ACIA, a nonprofit, from paying insurance premium taxes as well as other license and privilege taxes. The legislation could potentially lower premium costs as well by permitting the ACIA to individually assess policyholders in the event of excess losses instead of charging them up front with steep premiums based on hurricane prediction models.
If a catastrophic loss occurs, the ACIA would sell 20-year bonds to insurers to cover weather damage loss should the reserves run dry. ACIA’ customers would then be charged assessments for 20 years to pay for the bond.
Moreover, the bill allows the ACIA to place property liens on policyholders to secure payments, as well as authorize local tax assessors and revenue commissioners to collect the assessments.
“The goal of this bill is to provide coastal property owners the opportunity for more affordable, while still actuarially sound, insurance rates,” said State Insurance Commissioner Jim Ridling.
