About half of the US population resides within fifty miles or so from the coasts of our country, so the numbers of people impacted by changing insurance strategies of coastal coverage is substantial. In the case of Baldwin and Mobile Counties, an estimated 20,000 families are not covered from an insurance perspective for wind and hail damage because the coverage is either no longer available under their current policies or because the costs of coverage have priced them out of the market. Hanson was talking to "Men's 710 Breakfast and Speaker Fellowship" at Silverhill's Zion Lutheran Church at its April meeting. Hanson quickly discovered that 10% of attendees at Men's 710 had dropped coverage because of escalating insurance costs.
An estimated 52,000 insurance policies have been "dumped" in Mobile and Baldwin Counties, not by the insured, but by the insurance companies which have determined that long-term clients are not worth the risk of coverage! Data are poorly reported re long-term effects of these actions, but it is apparent that the poor and the elderly appear to be hurting most from insurance company decisions. This business strategy change is happening despite the fact that $200 to 250 million are paid out by residents in Mobile and Baldwin Counties above the state average, a differential that appears unjustified by facts available.
The arguments supporting the differential for insurance along the Gulf relates to the geographical position of the counties. Hurricanes happen in coastal areas and Mobile and Baldwin Counties are therefore "hurricane-prone" and more costly to repair when loss due to wind-damage occurs. No data has been made available to Alabama citizens to support that assertion. Average insurance rates in all of Alabama are in the mid-$950 range, but on the Gulf they are in the mid-$1150 range. Those are averages, so actual costs may be substantially more.
"So, we pay more insurance costs in Mobile and Baldwin Counties, but in fact we are subsidizing insurance costs for the rest of the state," Hanson explains. FEMA data show that 65% of hurricane damage does not occur in Baldwin and Mobile Counties, but in the counties north of us. We could infer that our buildings hold up better than those north of us, so damage is less pervasive when it comes to wind. Indeed, when you look at yearly tornado damage in terms of square miles covered and extent of damage compared to the footprint of damage relating to hurricanes which occur on average of once every 11 years or so, the Gulf counties actually are paying more than their fair share from an insurance perspective.
"Our problem is that statistics are not available to demonstrate the insurance coverage facts as we see them," Hanson told the Men's 710 group, "and our insurance companies are unwilling to provide actual information. Our local state legislators have introduced a bill to require that actual data be collected by county to show where insurance dollars are actually going for weather-related damage." That is, if Mobile and Baldwin Counties are really paying an unfair differential for insurance coverage and are being denied wind-damage coverage based on faulty information, Alabama citizens need to know the facts of the matter. Moreover, from a consumer protection standpoint, legislative relief may be appropriate. If 65% of the damage is happening outside of these two counties, why are we paying for coverage of others? The insurance pools seem to be skewed. "We are subsidizing the rest of Alabama with our widows and the poor," Hanson asserted. "And, the same thing is happening along the entire Gulf and East Coast."
Daniel Hanson is available to talk about HHII, current legislation being proposed for insurance data transparency, the implications of insurance statistical tracking, and the need for potential change in management of the insurance industry in Alabama. For additional information concerning HHII, check out its website at www.hhii.us or call Dan Hanson (251-928-3430).
