Alabama’s Healthy Market Impresses Commissioner Bell

August 8, 2005

Alabama Insurance Commissioner Walter A. Bell described his state’s insurance market as “impressive” and as a “healthy market, trending upward,” during the Alabama Independent Insurance Agent’s annual conference and exhibit in Destin, Fla.

“We have a lot of things going on in the state right now and you have a lot going on in your industry,” Bell told an audience of more than 400 AIIA members. Bell said the overall picture of Alabama’s property and casualty “side-of-the-house” shows that in the year ending 2003, insurers wrote more than $5 billion in property and casualty premiums in personal lines, automobile, homeowners, commercial, perils, ocean marine and fire policies.

“That is pretty impressive, we rank 27th in all the states in the nation,” Bell said. “All of those trends are going up, that tells me we have a fairly healthy market in the state of Alabama, and that’s certainly what we want.”

For all lines, there are about $14 billion in insurance premiums written in Alabama, which ranks the state 24th.

General fund

Bell cited statistics indicating the insurance industry is the largest contributor to Alabama’s general fund. Last year, the state collected $240 million from the industry, “without which I do not know what the state would do,” he said.

“Costs of regulation are minimal compared to what we collect for the state,” he said.

Bell pointed out there are about 65,000 licensed insurance agents in Alabama with 29,000 of them being domestic agents.

Still, Bell also lamented that the number of insurance agents in Alabama is going down, while the population is going up. He said it’s urgent to increase the number of insurance agents on the street to meet the needs of consumers trying to buy the product. “We have a very thriving industry here, keep writing those premiums and I am sure I will continue to see smiles on all those faces that I see,” Bell said.

“I was an agent at one time myself, the best job I have ever had except for working for Bob Rawlings. That’s why I love this job so much, because of the guy I work for. He’s a great boss and lets me go off to do things with the National Association of Insurance Commissioners, and knows that if I ever become president I will be lucky to be in the state two days a month.”

Bell, who was recently defeated in a run for NAIC president, said he wasn’t sure if he would ever try that again. “I’m not sure I’m going to try that again until I am sure if the governor decides whether he runs again,” Bell said. “He’s very important in terms of that decision for me, because if he doesn’t run again, I won’t run again-we have that kind of relationship.”

Bell said that after Hurricane Ivan more than 200,000 damage claims were filed but less than one-and-a-half percent of those claims are still outstanding. “We are working on those claims. We put out bulletins to ask companies why they can’t close those claims and we have reams of paper and are going to have to contract outside firms to analyze the data,” he said. “We will make that information public as soon as the analysis is completed.

“We are also preparing recommendations about how to get all claims paid in a reasonable amount of time after any natural disaster or terrorist attacks,” he said. “Terrorism is a huge threat today anyway.”

Bell said one of his biggest concerns is how flood claims are handled. “We have to come up with some way to develop a single-adjustor program,” Bell said. “I have absolutely no regulatory control of flood insurance.

“At 9 a.m. the morning after Hurricane Ivan the first caller we received asked, ‘Where’s my adjuster, I haven’t seen my adjuster yet,'” Bell explained. “I was in Montgomery, and the last time I looked out the window the winds were still blowing around at about 75 mph. I was just like you, trying to stay under cover. We have to deal with those kinds of things, as you know, we are customer-oriented.”

Coastal boom

Bell has been watching coastal markets and noted that the population of the state’s beach pool, which is the coastal insurer of last resort, has remained rather stable with from 3,100 or 3,200 policies. “That tells us that the marketplace out there is still very vital. Someone is writing insurance on the coasts and that is very encouraging,” he commented.

But he pointed out that reasonably-priced homeowners coverage becomes harder to find when baby boomers demand homes within 25 miles of the beach, and when the cheapest condominium is approaching a million dollars.

Bell applauded the AIIA for its efforts on the hurricane task force in providing a list of providers and working to find solutions.

He said he thought it would be “easy” to pass two-year licensing, but that has not been the case in the Alabama Legislature. Also, for more than nine years he said he has been trying to get fraud legislation on the table, but there hasn’t been any action. He said the trial lawyers aren’t about to let it through.

“I have never been so close to politics in all my life,” Bell quipped. “And I am awfully glad that for this long I have lived without it.”

The NAIC’s Interstate Compact, which mainly affects life insurance, has now been approved in 15 states, and needs to be approved by 26 states to take effect, which he predicted would occur by the end of 2006. He said the last thing anyone needs is another federal bureaucracy in Washington.

Bell said that although he hasn’t read anything about New York Attorney General Eliot Spitzer for a while, his probes will affect insurance regulation for some time.

“There are so many contingency commissions I can’t name them all,” Bell commented. “It is not the average agency that is breaking the law, it was a couple of ‘big guns’ who saw where they could add millions to their books.”

Bell said bid-rigging is against the law and fraud. He said that contingency commissions are often part of contracts and not fraud.

Alabama Insurance Commissioner,

Walter A. Bell

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