On May 8, the Alabama Legislature passed a bill that will open the residential homeowners’ insurance market along the Alabama coast to captive insurance companies by allowing them to write direct business in certain areas. The move is intended to increase capacity in that market by allowing coastal cities or other groups to form their own insurance companies. The legislation was seen as necessary, as residents of the Alabama coast have found it difficult to obtain homeowners’ insurance since hurricanes Ivan and Katrina hit the area several years ago. Since that time, many insurance companies have cut back coverage in the area, resulting in a lack of capacity. The legislation is currently awaiting the Governor’s signature.
The captives legislation was introduced with another bill that also sought to increase capacity. This bill would have expanded the state’s insurance pool coverage for coastal residents, however, while the bill was passed in the Senate, it not make it out of committee in the House.
The full text of the captives legislation can be found here.
