A rash of natural disasters has weakened the insurance market in Alabama, according to a new report by the Property Casualty Insurers Association of America (PCI).
"There is no question that the Alabama insurance market is in a fragile state right now," Monique Kabitzke, PCI's regional manager for Alabama, said in a press release. "Increasing losses from hurricanes, tornadoes and other windstorms have forced property insurers in a number of coastal states, including Alabama, to re-examine their business strategies."
In the report, PCI recommends legislative steps to strengthen the marketplace and increase access to affordable home insurance.
The group pointed to the recently passed "Strengthen Alabama Homes" bill as an example of an effective reform. Proponents say the bill will help policyholders retrofit their homes to reduce losses from storms. PCI also recommends the state:
- Implement and enforce a uniform statewide building code with wind-design requirements for new construction.
- Establish income tax deductions on "catastrophic savings accounts" for homeowners to set aside policy deductibles.
- Provide state income tax deductions on sales tax spent on materials to retrofit properties
- Enact legislation to reduce insurance fraud.
- Permit insurers to recoup assessments paid to the state's beach plan.
- Modernize the state's insurance rate regulatory system.
- Provide income tax deductions for consumers whose homeowner insurance premiums are greater than 5 percent of their adjusted gross income.
"Property insurers must be encouraged to enter the market, to attract more business to the state and offer consumers a wider selection of products and prices," Kabitzke said. "Homeowners must also receive appropriate incentives so they can have greater control of their losses. In this way, working together, we can provide a better, stronger insurance market for Alabama families and businesses."