Alabama Creates Research Center to Study Home Insurance

Gov. Robert Bentley is creating a research center at the University of Alabama to try to improve the availability and affordability of homeowners insurance following hurricanes and tornadoes that demolished homes from the coast to the Tennessee line.

Bentley went to the Tuscaloosa campus Wednesday to sign an executive order establishing the Alabama Center for Insurance Information and Research.

The center was recommended by a commission Bentley created to study homeowners insurance after hurricanes on the coast and deadly tornadoes in central and north Alabama. He said the center will be independent of the insurance industry. Its goals include providing information to help homeowners make more informed decisions and manage their risks, helping encourage more competition by identifying barriers that distract insurance companies from doing business in Alabama, and eventually making homeowners insurance more affordable.

“This is a long-term process. We know that,” Bentley told more than 300 people attending the announcement.

One of Alabama’s largest homeowners insurance companies, Montgomery-based Alfa Insurance, welcomed the center. Spokesman Jeff Helms said Alfa looks forward to working with the center to educate consumers and develop market-based solutions that improve the affordability of insurance.

The center is getting $1 million in state funding for its first year.

The center is one of the first actions resulting from Bentley’s Affordable Homeowners Insurance Commission. Bentley originally created the commission to study rising homeowners insurance rates and declining competition on the coast after Hurricane Ivan in 2004 and Hurricane Katrina in 2005. He expanded its role statewide after tornadoes killed 250 people on April 27, 2011.

An insurance industry analysis reported a state-record $2.95 billion in claims for the tornadoes, as well as thunderstorms and hail storms that hit the state in the week leading up to the tornadoes.

Bentley said Wednesday the tornado-stricken areas have not seen the big jumps in homeowners insurance rates like the coastal areas did, but he is concerned they will.

A member of the commission, state Revenue Commissioner Julie Magee, said she understands the problems because after the hurricanes, she lost the wind coverage on her Mobile home and saw her insurance deductible double to $5,000. She said the research center is an important step toward having quality insurance that all homeowners can afford. The commission’s next step will likely be preparing bills for the 2014 session of the Legislature, she said. The commission has already helped pass legislation that requires insurance companies to provide more information about their policies and premiums in difference areas of the state.

After Bentley’s commission recommended the research center, the state Revenue Department sought proposals from universities. The University of Alabama submitted the only proposal. Magee said she expects the center to work with business and engineering professors at Alabama as well as other universities across the state.