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Chip Drago
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Brooks, Riley to tout
insurance reform bill
here Wednesday afternoon

By Chip Drago
Mobile Bay Times
A south Alabama state senator has introduced legislation to create the Alabama Coastal Insurance Authority in a bid to ease the property insurance crisis stemming from recent hurricanes on Alabama's Gulf Coast.

The bill authored by State Sen. Ben Brooks, R-Cypress Shores, is a market-based proposal that would include all insurers authorized to write insurance in Alabama and require them "to participate in the writing, the expenses, the profits and the losses that occur when insuring residential and commercial property in counties adjacent to the Gulf of Mexico for essential property insurance."

Brooks, Gov. Bob Riley and other state lawmakers are scheduled to tout the bill Wednesday at a 2 p.m. press conference at the First Baptist Church of Irvington in south Mobile County.

"This bill is just one major tool in the cause of insurance reform," said Brooks. "There are other tools we will need to look at as well, such as the captive insurance bill that we filed last year."

Brooks said a plethora of legislators had been invited to attend the news conference, including all members of the Mobile and Baldwin County legislative delegations. Brooks said he expected former Foley Mayor Tim Russell, who has been at the forefront of addressing the coastal insurance crisis, to attend.   

In crafting his proposal for Alabama, Brooks said he conferred widely in all areas of the insurance industry and borrowed from legislation passed in Mississippi and, in particular, South Carolina, whose program Brooks said graded "an A." He also examined the program adopted in Florida, but found its approach too weighted toward the government and away from a market place solution.

"I looked at Mississippi closely and Florida enough to know that was not the way I'd want to go, philosophically," said Brooks. "It's not what I believe in philosophically. Florida is saying the state should replace the insurance market, not encourage the private marketplace. I have a fundamental difference in philosophy, so the approach I take is to offer a certain spectrum of choices in the bill -- wind pool, tax incentives, a number of things that encourage an array of choices in the marketplace."

The bill would create an Alabama Coastal Insurance Authority Board whose nine members would be appointed by the governor. 

Among the bill's provisions are an income tax credit for certain weather-resistant property improvements and measures which would allow owners of pre-1991 condominiums to obtain insurance from captive insurance companies.

A bill to expand captive insurance markets to residential customers did not get out of the starting blocks in the 2007 legislative session but will again be offered in next year's session, said Brooks. 

Brooks' reform bill is titled the "Alabama Coastal Property Insurance Reform Act."

Alabama coastal communities have been in turmoil with property insurance rates increasing 300 percent or homeowners' policies dropped altogether.

"The purpose of this act is to encourage market participation by private insurance carriers and an adequate market for essential property insurance for residential and commercial property to applicants in counties in Alabama which are adjacent to the Gulf of Mexico," the bill reads.

The board governing the authority would include:

The members' four-year terms would be staggered.

The authority would be state tax-exempt and as far as possible exempt from federal taxes as well, said Brooks.

Unexpended monies and surpluses would carry over to the next fiscal year to build up a special reserve to be called the "Alabama Coastal Insurance Authority Trust Fund." The reserve fund is intended to guard against "the rainy day" of another Katrina-like catastrophe.

The bill also establishes "zones" and a schedule of credits according to risks.

While the bill is sound and worthy as written, said Brooks, he is open to any suggestions that would improve it.

"All of this thought, research and discussion led to the conclusion to find a market place-based series of solutions to give government and individuals tools from which they can select, not a single silver bullet solution to all the insurance problems," said Brooks. "The idea is we've got to have a toolbox with a set of different tools to help all individuals in their different walks of life to deal with these insurance issues."

"This is a process and may include building code improvements and other ideas, all additional tools in the insurance reform world.," said Brooks. "All of this is in support of the process, not just talk, but of doing the walk, putting bills on the table."

"We're trying to put together a series of tools that municipalities, individuals, businesses and insurance carriers can look to to improve the insurance marketplace," Brooks said. "And one of those tools is the captive insurance bill that we (Brooks and former state Sen. Bradley Byrne) introduced last year. It's already pre-filed for the upcoming sessions. That bill didn't even get a committee hearing. It's the bill that Tim Russell worked on so diligently. The primary thrust was to expand the captive insurance market to the residential market. Right now it's limited to the commercial market."

"Captive insurance is not for every municipality or every geographic area, but maybe it's a tool that some can use," Brooks said. "I say let's give people that option."

Brooks said he also expected to attend the news conference three private insurance agents who assisted in the creation of the bill -- Jay Ison, Ken McElhaney and Carl Schneider.
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