It's not that people don't want to save for retirement, it's because they can't afford to.
Dec. 12--Hurricane losses cost insurance companies less than losses in other parts of Alabama, even though coastal premiums are 300 to 600 percent higher, an Alabama homeowners' group says.
Insurance company claims, or losses, as a percentage of premiums paid were 50.68 percent for coastal Mobile and Baldwin counties averaged over 10 years, compared with 92.45 percent for the rest of the state, according to insurance industry submissions to the state.
When tornadoes that hit inland policyholders in 2011 were removed from the equation, losses averaged 55.25 percent of premiums paid for Mobile and Baldwin counties, compared with 75.6 percent for the rest of the state.
"It's been an eye opener," Dan Hanson, an organizer for the Homeowners' Hurricane Insurance Initiative in Alabama said in an interview Monday. "This has been a surprise in that it's told us we are
less expensive than the rest of the state."
Clarity Act yields numbers
The group is working on a Gulf Coast, East Coast initiative to create a Coastal Band that would provide insurance for coast policyholders in 17 hurricane-prone states. The group started with the idea of a nonprofit to provide wind insurance, but says flood could possibly be added.
HHII already managed to push through the Alabama Legislature a law that requires insurance companies to report premiums and losses by zip code. The data, dating to 2003 and posted on the Alabama Insurance Department website, has allowed HHII and others for the first time to see how much money insurance companies are collecting and paying for losses by county.
A similar bill has failed to gain traction in Mississippi, but HHII members are helping build a coalition to push for a law similar to Alabama's, which is called the Clarity Act.
The Alabama Insurance Department, which regulates insurance rates for the state, interprets the figures differently from HHII. Deputy Commissioner Charles Angell said insurance company expenses must be factored into the equation. Those expenses, he said, are about 48 percent on the Coast -- 10 percent higher than in the rest of the state. Insurance companies operate with slim profit margins in Mobile and Baldwin counties, he said, and generally lose money on homeowner policies in the rest of the state.
Angell believes Alabama coastal rates are adequate, not excessive.
HHII has crunched the numbers in various ways. For example, insurance figures show claims from Hurricane Ivan cost the industry more as a percentage of premiums in five upland counties than they did in Baldwin County. Mobile County losses from Ivan as a percentage of premiums collected were lower than they were in 17 inland counties.
The Alabama Insurance Department said losses as presented by HHII also look lower on the Coast because premiums are higher. In response to the criticism, HHII ran the figures with premiums basically equalized for the state. Equalizing premiums resulted in losses that over 10 years averaged 82 percent of premiums paid for Mobile and Baldwin, compared with 92.45 percent for the rest of the state. No expenses are factored in.
In Alabama, state law requires equitable distribution of insurance premiums. The same applies in Mississippi, HHII members told the Sun Herald.
"We really wanted to skewer the (Alabama) Department of Insurance on this and show them that they were not doing their job effectively," said HHII member Stan Virden, who came up with the idea for the Clarity Act.
The Mississippi Insurance Department collects each year from insurance companies their total premiums written and losses incurred, but the results are presented online by company, not by county or region. Insurance Commissioner Mike Chaney said he does not have the staff to collect or compile the data by county.
Virden said it's up to consumers to demand equitable distribution of premiums, along with a Coastal Band to insure hurricane-prone properties. Otherwise, HHII members said, politicians are not going to stand up to insurance companies.
HHII members believe people are under the impression hurricane losses are higher than other claims partly because of all the hurricane coverage on the Weather Channel. But hail, tornadoes and other calamities can be equally or more devastating, they said, as Alabama claims numbers show.
HHII has so far gathered partners in four states -- Mississippi, Alabama, Louisiana and Florida. They were on the Mississippi Coast earlier this week to have more discussions about the Coastal Band, followed by a public meeting.
HHII was organized through a coalition of churches. First United Methodist Church in Long Beach has provided meeting space and support on the Mississippi Coast.
"What we have right now is an insurance industry that is supporting an international investor," said the Rev. Rod Dickson-Rishel of First United Methodist. "It's not supporting the people on the ground."
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