'Storm Protection' Bill Would Force Companies To Insure Poor Risks

A bill designed to protect homeowners hit by a storm could adversely affect most other customers of the insurance company involved, says the National Association of Independent Insurers (NAII).

The bill, HB 2649, would prohibit an insurance company from canceling or non-renewing a homeowner's policy for three years after a claim was filed for a loss caused by a windstorm, hailstorm or other act of nature.

"As the bill is written, an insurance company would have to keep insuring individuals for three years no matter the person's claims history simply because they had a windstorm loss," Hanson told the state Insurance Committee. "The bill would force insurers to do something that insurance is not meant to do - insure a known bad risk. The effect would be to discourage new insurance companies from doing business in the state, or from offering new coverages, which will leave consumers with fewer options.

"Other similarly insured customers of the insurance company then pay for those restrictions, covering the extraordinary claims of an individual who, in any other case, would be taken out of the pool of customers in which this person has proved he does not belong," he added. "Insurers need to be able to know that they can reasonably make decisions based on competitiveness, not on whether a law will keep them insuring a risk even when maintaining that business is no longer profitable."

NAII, based in suburban Chicago, is a full-service property and casualty insurance association, with more than 650 member companies.