Editorial: Legislators need educating on coastal insurance

insurance
By Press-Register Editorial Board
May 10, 2010, 5:11AM


THIS YEAR’S session of the Legislature confirmed what property owners in southwest Alabama already knew: Key legislators have little or no understanding of what the crisis in the region’s homeowners’ insurance market means for the state as a whole.

While major insurers continued their retreat from the coast, dropping thousands of wind policies in Mobile and Baldwin counties, the Legislature failed to act on more than a half-dozen solid proposals for stabilizing the coastal insurance market.

Six insurance bills, including a seemingly noncontroversial requirement for the state’s insurer of last resort to refer to itself as the "wind pool" instead of using the misleading moniker "beach pool," went down in one Senate committee meeting. Sen. Lowell Barron, D-Fyffe, who once based his opposition to insurance reform on the distance from Fyffe to the Alabama coast, couldn’t get past a personality conflict with Sen. Ben Brooks, the Mobile Republican who sponsored several insurance bills. Sen. Barron said his colleague was "abrasive" and wanted others to "help him solve his problems."

Apparently Sen. Barron missed the point that the insurance bills were intended to help solve problems affecting thousands of property owners, the state’s revenue system and a huge chunk of Alabama’s $9 billion tourism industry.

Mobile and Baldwin counties generate $1.8 billion in state revenue. Another bad hurricane season — with the accompanying hit on coastal insurance — would wipe out tens of millions in tax revenue that Sen. Barron and his colleagues in north Alabama need to provide services for their own constitutuents.

The Legislature did approve one insurance bill this year: Sen. Trip Pittman’s measure to make it easier for "surplus lines carriers" — insurers whose rates aren’t regulated by the state — to enter the coastal market.

Any insurance legislation that promotes competition in the coastal counties helps, but most surplus lines companies have relatively high rates, and their policyholders are vulnerable if the companies go bankrupt.

In 2009, the Legislature passed a bill sponsored by Sen. Brooks that allows homeowners to reduce their premiums if they make their houses more hurricane-resistant. This measure, and Sen. Pittman’s surplus lines bill, do represent progress on the coastal insurance front, but the Legislature must do more than inch forward on an issue of major significance for the state’s economy.

Before the Legislature convenes next year, advocates of insurance reform need to launch an all-out campaign to educate senators and House members from north Alabama on the crisis in the coastal insurance market and its ramifications for their constituents. The Press-Register editorial board believes that if Sen. Barron and his allies truly realized what’s at stake in the debate, they would put aside regional and personal differences and get behind a plan to protect the economy of southwest Alabama.