Posted on May 19, 2014
Many Maryland residents, business owners and legislators are focusing on coastal insurance after several major insurance carriers attempted to stop issuing new policies or renew existing ones. Over the last several years high risk coastal areas of the state experienced increased hurricane and tropical storm activity as well as a rise in sea levels. In 2007 insurance carriers determined after the huge financial losses associated with Hurricane Katrina and Hurricane Rita, that it would be best to leave the Maryland personal and commercial property insurance market.
While the Insurance Commission acknowledged that insurance companies have the right to not issue new policies in coastal Maryland, the legislature determined that certain requirements needed to be put in place before carriers could just stop issuing or renewing property insurance policies in the coastal areas. But just having the coverage isn't enough, the Maryland House wanted to also ensure that coastal property insurance remained affordable to residents and business owners not only with regard to insurance premiums but also with deductibles.
The House did pass a bill in December 2011 that offers safeguards to property owners although it stops short at stopping insurance companies from leaving the Maryland property insurance market entirely. The legislation does require that insurers must have commission approval prior to raising deductible limits by more than 5 percent. The hope is that property owners won't see deductibles quickly increase. Additionally, companies may not pick and choose the areas of Maryland that they want to do business in, and if pulling out of coastal area markets by more than 5 percent through cancellations or non-renewals, they must also receive prior approval from the Insurance Commissioner.
The real way that citizens and business owners can affect the affordability of their property insurance coverage is by taking action to reduce risks. The House bill requires that insurance companies offer premium discounts for policyholders that install hurricane shutters, water barriers, reinforced roofing and other safety equipment designed to mitigate disaster damage.
Legislator and Insurance Commission concerns about coastal insurance continue with efforts to make sure affordable coverage is available to all; however, in January 2012, the Maryland Court of Appeals ruled that Allstate Insurance Company could stop writing property insurance policies within the state's coastal areas. Only time will tell if coastal insurance offerings and availability will continue or become harder to obtain.