IIABA Survey Finds 2.5 Million Lost Home Cover

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 their homeowners insurance coverage in the last 24 months as non-renewals and premium increases are becoming more common, according to a new survey by an agents group.

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

IIABA noted that homeowners can take significant steps to protect themselves from the cancellations and price increases found in the survey.

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

"When you consider that the number of households losing coverage during a two-year period is more than the combined resident populations of four states?Alaska, North Dakota, Vermont and Wyoming?you realize how many lives are being affected by the shrinking homeowners market," said Robert A. Rusbuldt IIABA's chief executive officer.

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

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

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

? More than 25 percent rate increase experienced by 13.8 percent

Rate increases were undetermined for 6.3 percent of households.

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

"But consumers should not feel helpless," he said. "They still can affordably protect themselves and their homes even in this difficult market."

IIABA said 1,000 consumers were contacted by telephone for the survey, 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. reacted to the survey by commenting that it "fails to tell the whole story."

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

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

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

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

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

IIABA also advised buyers to obtain a house's claim history before purchasing homeowners insurance and to work with an independent agent who can act as an insurance purchaser's advocate for a claim or other problem.

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