Conn. pursues loss mitigation, market alternatives for coastal homes

News Currents

Home insurers in Connecticut may no longer require permanently installed storm shutters as a condition for writing or renewing policies but must offer consumer choices of loss mitigation controls and deductibles, according to a report on coastal insurance issued by Connecticut Insurance Commissioner Susan Cogswell.

Citing an availability problem for coastal residents, Cogswell is also recommending that the state create a voluntary Coastal Market Assistance Plan (C-MAP) to supplement and be run by the existing FAIR Plan residual market insurer. The department hopes that the C-MAP will be available to consumers by mid-March.

But if the voluntary approach of a C-MAP does not work, she will recommend that the FAIR Plan expand to offer a full homeowners policy.

Also, she said she would submit legislation giving her department authority to disapprove excessive personal property insurance rates within a competitively-priced market and to increase the limits covered by the state guaranty fund from $300,000 to $500,000 to reflect increasing home values.

Cogswell said her department has concluded “there is an availability problem for homeowners insurance within the admitted markets for homes located within 1000 feet of the coast.” Her recommendations are meant to deal with the problem before it gets worse.

The report found that 59 percent of the market imposes mandatory mitigation requirements of some type for new business while the remaining 36 percent are offering a choice to new customers of mitigation or increased deductibles or no requirements at all.

Only 5 percent of the market requires mandatory shutters for renewal business. The remaining 91 percent of the market is offering a choice or imposing no requirements at all.

“Consumers living near the coast certainly recognize they need to take measures to protect their homes. At the same time, we are expecting carriers to recognize when residents take these measures by reducing premiums or deductibles,” said Cogswell.

The report and recommendations are based on a public hearing she held in September following a public outcry over a decision allowing one insurer, Andover Insurance, to require homeowners living within a mile from the coast to install special storm shutters on their homes or face non-renewal of their policy.

“I clearly heard the frustration and anger from homeowners when the department approved Andover’s shutter guidelines,” admitted Cogswell.

At the September forum, coastal residents expressed concerns about the cost of installing shutters and agents relayed anecdotal evidence that insurance carriers are not writing policies in violation of their filed guidelines.

Insurers must offer consumers choices in mitigation controls they accept and in deductibles. Consumers must be allowed to use measures recommended by the Institute of Building and Home Safety, including plywood shutters or impact resistant glass. Carriers may also apply a hurricane deductible.