Baldwin Mutual To Drop More Than 1,700 Policies
Baldwin Mutual Insurance Co. plans to drop coverage of nearly 1,700 properties in Mobile and Baldwin counties — more than a quarter of its total in the counties — over the next 13 months, according to the company and the state Department of Insurance.
Meanwhile, American Modern Home Insurance Co. plans to stop offering new wind policies to homeowners in parts of Mobile and Baldwin, while dropping coverage of a few commercial properties, company officials said.
Since Hurricanes Ivan and Katrina hit in 2004 and 2005, property insurance in coastal Alabama has become increasingly expensive and difficult to obtain.
Kevin Russell, a vice president at Foley-based Baldwin Mutual, said the company had hoped to avoid cutting policies and delayed making such a move but eventually had no choice.
“We felt pretty forced, just because of the industry and the market conditions,” Russell said. “We were one of the final companies to make an announcement (to cut policies). We did everything we could to provide coverage.”
Starting July 21, the company will begin denying renewals to property insurance customers and will continue to do so as annual policies expire over the next year, Russell said.
The cancellations will be concentrated near coastal areas of the counties, he added.
Russell is the son of Baldwin County Probate Judge Tim Russell, who led Baldwin Mutual for more than three decades. The elder Russell is chairman of the Affordable Homeowners Insurance Commission, a group assembled by Republican Gov. Robert Bentley last year to find solutions to the lack of insurance availability and affordability that is particularly common in south Alabama.
Kevin Russell said the company’s costs for reinsurance, which essentially is insurance purchased by insurance companies to minimize their potential losses from catastrophic storms, have continually increased. For each hike in reinsurance costs, it took the company 12 to 18 months to get higher rates for customers approved and in place.
“During that time, we operated at a loss on the policies,” he said. “It was our hope that at some point the rates would stabilize, so that the income and expense would balance out. That has not happened.”
Since Hurricane Ivan in 2004, insurers have announced plans to drop more than 51,000 wind policies in Mobile and Baldwin.
American Modern Home is dropping coverage for 10 commercial properties in south Alabama, according to the state Department of Insurance.
South Alabama may be more affected by the company’s decision to deny policies to new customers with homes in the parts of Mobile and Baldwin covered by the state’s insurer of last resort, the Alabama Insurance Underwriting Association, commonly called the beach pool.
“It’s a very small portion of those counties. It’s predominantly the beach area” where the company will no longer offer coverage, said Diana Matalka, an assistant vice president for the company.
The change, which became effective May 27, will not affect the company’s existing customers, she said.
“We’ve pretty much filled our allotment of the wind coverage that we wanted in that area,” Matalka said.
Representatives of Alabama’s three largest property insurers — State Farm Insurance Cos., Alfa Mutual Group and Allstate Corp. — all said that they knew of no plans for their companies to drop policies or raise rates in the state.
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