HHII Homeowners' Hurricane Insurance Initiative

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Another 'Trail of Tears'

 Billy Dawkins just one of many mired in insurance crisis
 By Bob Morgan as reported in the Gulf Shores Islander

FOLEY, Ala. - Billy Dawkins of Elberta has a colorful ancestry. His grandmother was a Cherokee Indian from South Carolina. Her mother and father were on the "Trail of Tears," the forced removal of the Cherokees from their native lands to the Oklahoma Territory. It was a march that resulted in one-fourth of the 16,000 Indians dying from exposure and inadequate food. 

According to Dawkins, his grandmother and her brother were so young at the time it was thought they probably wouldn't survive the forced trek. As a result, they were left behind with a white family. Dawkins' grandfather a preacher - eventually met his grandmother in South Carolina. They married and, in time, moved to Lamar County, Ala., where they raised a family.

Retired after 44 years in the trucking business - "It's no easy job" - Dawkins moved to this area approximately 10 years ago from Woodstock, Tenn.  Today, he finds himself on a trail of hardship of his own.

In 2008 his wife, Eva, was diagnosed with multiple sclerosis, a disease of the central nervous system. Her medication costs approximately $60,000 a year.

"Everything is expensive with MS," Dawkins said recently.

"Social Security is about all I've got except for my savings. We own our home - that's ours. But the insurance and drugs we have to have - I'm digging down in my savings. I don't know how much longer I can put up with this."

The insurance Dawkins refers to is homeowner's insurance. It is a familiar refrain on the Alabama Gulf Coast.

"If we didn't have to pay the rates they got us on we could survive a few more years, but they keep on going up and going up and going up. It's too much of a burden - we can't afford it.  It won't be many years before my wife and I are homeless."

According to Dawkins, his annual homeowner's insurance has quadrupled in less than five years. It started out with an annual premium of $875; now it is over $3,000, and Dawkins said everybody is saying it's going up 45 percent this year.

Dawkins had been with State Farm insurance since 1950.

"They got ridiculous with their rates, so I found somebody cheaper, and they're just about where State Farm was in less than five years."

Homeowner's insurance on a house the size of the one he lives in today would cost $500 to $600 annually in Woodstock, Tenn., Dawkins said. And he knows he isn't alone in this predicament. He's met people in Foley, Elberta, Lillian and Gulf Shores, he said, who are like him - on the same difficult trail where homeowners' insurance is concerned. The truth is, in Alabama the
insurance trail of tears leads through two counties almost exclusively - Baldwin and Mobile.


In a sense it started on Sept. 16, 2004, when Hurricane Ivan made landfall on the Alabama Gulf Coast as a Category 3 storm. As a result of that storm event, within months 200,000 insurance claims were filed for more than $1billion in insurable losses in this state alone.

"Rates started growing for homeowners about the time Katrina hit (in 2005)," Ragan Ingram, Government Relations manager for the Alabama Department of Insurance, said this week.

While 65 of the state's 67 counties would be declared a disaster from Ivan, nearly six years later only two counties - Baldwin and Mobile - still feel the lingering effects of disaster, and that from escalating insurance rates.  It's something Billy Dawkins said he never envisioned when he bought property here 15 years ago and moved here five years later.

For Dan Hanson, on staff with the Homeowners' Hurricane Insurance Initiative (HHII), a grassroots group that has been attempting to address the homeowners' insurance crisis along coastal Alabama, it is at once as simple and as complex as the numbers.

"If you're not fixing the premiums, you're not fixing the problem," he said recently.

"Every time we're talking to somebody upstate they're stunned at the difference (in rates). They're also surprised to learn that four years ago we were at the same price as everybody else - maybe a tad higher."

What Hanson said held true for generations - essentially equal homeowners' insurance rates for the state from top to bottom - has suddenly resulted in rates that are 300 percent higher along the coast than inland.

And here is where Hanson and HHII say the numbers get complex if for no other reason than they allege numbers are not available to the public.  Hanson and HHII approximate - Hanson is quick to point out the figures are approximations - that 87.5 percent of the state pay $900 annually for homeowners' insurance, while 12.5 percent - Mobile and Baldwin counties - pay $3,500 annually.

According to Hanson, as HHII talks to people and holds meetings in this area on the coastal insurance crisis, he hears coastal homeowners speak of annual rates of $2,400 or $2,500 more so than $4,000, but, as he points out, his mother in the Fairhope area for one pays $4,000 and has never had a claim.

Again, Hanson said the numbers are not official (the last published state average of $894 was in 2006) because "you can't get the real numbers."  
"A lot of what is reviewed ... is proprietary, so it's not public," Ingram said in referring to insurance companies and how they arrive at rates.

"Certain parts (of it) are in the 'black box' so to speak. That's standard."

But HHII charges that they cannot get any real numbers out of the Department of Insurance either. DOI says the information is protected by law, Hanson said. Furthermore, HHII says Ingram and DOI have now ceased to be responsive to their telephone calls. Some of the calls HHII have made of late to DOI have been about setting up a research appointment regarding the state's so-called "Sunshine Law."


HHII is currently working on drafting several legislative bills, one of which would subject DOI to all aspects of the state's Sunshine Law or "Open Meetings Act." The bill would require DOI to publish annually full disclosure of all categories of actual insurance claims and losses zip code
by zip code. All insurance companies that do business in Alabama would supply DOI with the information.

Sen. Trip Pittman of Fairhope has asked for county by county/zip code by zip code numbers regarding the amount of claims made annually in Alabama, Hanson said.

"The insurance companies won't give it to him, and the Department of Insurance won't give it to him," Hanson said.

Under HHII's transparency bill those claims would be published and broken down for fire, hail, tornadoes, floods and so on. Also, DOI would be asked to disclose the "actuarial model" and data used in calculating premiums.

For HHII, Hanson and people like Billy Dawkins the question is a fundamental one: Are Baldwin and Mobile counties really more expensive than the rest of the state when it comes to insuring property?

Ingram says yes. "Exposure in these two counties is massive," he said this week.

"What drives (the cost) more than anything is the cost of re-insuring for these front-line companies. Those rates aren't reviewed by anybody."

HHII, on the other hand, is asking if coastal Alabama is threatened by tropical storms and hurricanes while upstate Alabama is prone to tornadoes, floods and hail; and if, as one national insurance organization (ISO) has reported, 45.6 of catastrophic losses from 1988-2007 were from hurricanes and tropical storms as opposed to 26.5 percent for tornadoes, why aren't coastal homeowners paying 72 percent higher rates than upstate homeowners rather than 250 to 400 percent higher rates?

It leads Hanson to wonder if coastal Alabama is not subsidizing upstate Alabama in this regard.

"There is strong circumstantial evidence that we're not more expensive that the rest of the state or not that much more expensive," Hanson said.

As for the perception that coastal Alabama is all about rich beachfront property owners, Hanson said Billy Dawkins and his ailing wife do not fit that profile.


Some of the members of Baldwin County's legislative delegation have in recent meetings with HHII arrived at what Hanson calls "creative ideas that would significantly lower our premiums if passed." These will be discussed and described at HHII's Nov. 10 meeting at The Gathering Place at Spanish Fort United Methodist Church at 7 p.m.

Other bills HHII is drafting would require that premium rates not vary by more than 50 percent throughout the state; another sets the limit at 100 percent. These model bills have received mixed reaction from the Baldwin County legislative delegation, according to HHII.

Representatives Randy Davis and Steve McMillan said the model bills would reduce rates along the coast but would be difficult to pass. Rep. Joe Faust has gone on record as saying he would pre-file some of the bills, one being the transparency bill, another a bill calling for a task force that would explore a Southeastern States insurance compact that would form a special insurance district for the coast. Pittman said he needs to see more details on the bills.

Asked this week about his assessment of HHII, Ragan Ingram said, "They're concerned and working hard and making their voices heard ... . They have a right to be concerned and involved."

But Ingram said any ideas of taking insurance rates back to pre-Ivan levels isn't going to happen.

Ingram pointed out something that he said HHII wants that isn't "do-able": "Charging the same rate in Foley and Scottsboro for wind insurance isn't feasible."

For Hanson, however, it's the numbers again: "They're assuming we're more expensive on wind and hail; that's why we want the numbers. We're not 300 percent more expensive.

"The people that are approving (rates) and supposed to be protecting us won't give us the information so we can see why they approved it," Hanson said.

DOI is, in Ingram's words, trying to negotiate with insurance companies that don't want to renew policies along the coast.

"We work on behalf of consumers and continue to try and bring in more competition," he said.

Meanwhile, Billy Dawkins said he and his wife are just trying to survive.

"Maybe we can get the insurance rates down, and we can live normal lives maybe then. I just can't give up my wife on account of insurance. That's just important, and we're gonna do our best to keep her as long as we can."