IIABA Survey Finds 2.5 Million Lost Home Cover

NU Online News Service, May 13, 3:43 p.m.EDT?May 13?Nearly 2.5 million households have lost theirhomeowners insurance coverage in the last 24 months as non-renewalsand premium increases are becoming more common, according to a newsurvey by an agents group.

The consumer study was done for the Alexandria, Va.-basedIndependent Insurance Agents & Brokers of America and it drewan instant complaint from an insurers group, which said it gave anincomplete picture of the marketplace

IIABA noted that homeowners can take significant steps toprotect themselves from the cancellations and price increases foundin the survey.

The national study determined that more than half of the 2.5million households that lost coverage (approximately 1.3 million)are located in the South. Approximately 73 percent of non-renewedhouseholds were able to find other coverage.

"When you consider that the number of households losing coverageduring a two-year period is more than the combined residentpopulations of four states?Alaska, North Dakota, Vermont andWyoming?you realize how many lives are being affected by theshrinking homeowners market," said Robert A. Rusbuldt IIABA's chiefexecutive officer.

IIABA said its survey also determined that approximately 51million households (about 42 percent of all American households)experienced a homeowners insurance rate increase in the last 24months. Of those households, the rate increases were asfollows:

? Up to 10 percent rate increase, experienced by 56.7percent

? Rate increases of 11-25 percent experienced by 23.2percent

? More than 25 percent rate increase experienced by 13.8percent

Rate increases were undetermined for 6.3 percent ofhouseholds.

"The tough homeowners insurance market understandably has manyconsumers scratching their heads and worrying about their wallets,"Mr. Rusbuldt said. "Agents are seeing non-renewals and double-digitprice increases in virtually every state in the country."

"But consumers should not feel helpless," he said. "They stillcan affordably protect themselves and their homes even in thisdifficult market."

IIABA said 1,000 consumers were contacted by telephone for thesurvey, which had a margin of error of plus or minus 3.75 percent.It was conducted in April by International Communications Research,an independent survey firm based in Media, Pa.

The Alliance of American Insurers in Downers Grove, Ill. reactedto the survey by commenting that it "fails to tell the wholestory."

Rey Becker, Alliance vice president for property-casualty, said:"In the best of years, there is always turnover in the propertyinsurance business. Homeowners policies are cancelled ornon-renewed for a variety of reasons, by both property owners andtheir insurance companies. A turnover of 2.5 million policiesconstitutes only 3.4 percent of the 72.6 million owner-occupiedhousing units in the United States spread over two years."

Addressing premium increases over the past 24 months, Mr. Beckersaid, "It is a matter of public record that insurers facedsignificant natural catastrophe and mold-related losses, as well asthe aftermath of 9/11, that had to be addressed."

He added that many insurers also needed to diversify and reducetheir concentration of risk in some areas of the country,commenting that "it is also important to note that rates have nowlargely stabilized."

Mr. Becker said that many cancellations are at the request ofthe property owner related to the sale of the home, mortgagerefinancing or switching insurance carriers for a lower premium,etc.

IIABA said there are ways consumers can reduce the possibilityof facing non-renewal or premium increases from their homeownersinsurance company and the Alliance said it agreed. In particular,IIABA mentioned paying attention to what sort of claims are filedand keeping them to a minimum, as well as bundling differentcoverage with one insurer.

IIABA also advised buyers to obtain a house's claim historybefore purchasing homeowners insurance and to work with anindependent agent who can act as an insurance purchaser's advocatefor a claim or other problem.

According to Mr. Becker, in 30 states, homeowners experiencingunusual difficulty finding coverage from an insurance company canobtain a 'backstop' coverage through FAIR Plans, and insuranceagents can place their customers in these plans.