Meanwhile, neighboring Texas, which also has its own state-supported windstorm insurance plan, is now pushing for an inter-state approach, where several coastal states would pool their resources.
State-subsidized windstorm insurance programs in Gulf Coast states, called insurers of last resort, have in the past decade faced explosive growth and continued uncertainty over whether the funds could sustain another multi-billion-dollar hit. The Texas association is funded through policyholder premiums, assessments on property insurance providers, reinsurance and a catastrophe reserve trust fund, according to the department.
Presently, the Alabama Insurance Underwriting Association, also known as the "Alabama Beach Pool," provides coastal windstorm coverage to those who cannot receive coverage elsewhere. According to its Web site, the number of policies in force has risen from just under 3,000 in 2004 to over 22,000 in 2011. The total insured value of the properties has risen from $337 million in 2004 to $3.9 billion in 2011.
|
Texas' proposed plan would spread the risk among all coastal states to ensure the next storm doesn't cause a major economic catastrophe. Lawmakers also are exploring ways to strong-arm private insurance companies into covering coastal property and other areas they withdrew from after costly storms.
The idea of combining risk has its supporters in the Texas, Louisiana and Mississippi state legislatures. Alabama's legislature to date has not expressed an interest in joining.
-Jim McConville