Coast condo industry asks Riley for action on rising insurance rates
By Garry Mitchell
Associated Press Writer
MOBILE — As Labor Day tourists take an end-of-summer beach trip, owners of thousands of condominiums that line the Alabama Gulf Coast say they’re getting burned by soaring insurance premiums.
Insurance legislation aimed at making coverage available and affordable on the coast since rates spiked after Hurricane Katrina couldn’t come soon enough for the resort real estate industry.
“It’s horrible. Rates have gone through the ceiling,” said Fort Morgan builder Greg Miller.
Miller said Friday he paid $22,000 in coverage on four condo units until Katrina struck two years ago. He said he now pays $108,000 on his units for less coverage. “That’s all we could get.”
He said the deductible on wind damage has risen from 2 percent to 5 percent.
Rates began rising after Hurricane Ivan struck three years ago as insurers moved to avoid huge disaster losses from future storms.
“We actually have some documented 1,000 percent increases. Most are in the 300 to 400 percent range,” said longtime insurance dealer and former Foley Mayor Tim Russell.
Russell is among those pressing Gov. Bob Riley to call a special session of the Legislature to deal with the coastal insurance crisis, which Russell blames for a slowdown in construction on condos planned before Ivan.
Riley has discussed with lawmakers the need for a special session on ethics reforms, but has made no decision on calling one.
If a session is called, insurance measures might be among the issues addressed, Riley spokesman Jeff Emerson said.
State Sen. Ben Brooks, R-Mobile, said he’s preparing some insurance reform legislation. Brooks declined to release details on the unfinished bill, but said it does not require a subsidy from the state.
Brooks, who is an attorney, said he’s surveyed reforms in South Carolina, Florida and Louisiana and favors the South Carolina model. The South Carolina Legislature passed a bill in June to help stabilize the cost and availability of coastal insurance.
Provisions include allowing homeowners to put money into tax-deductible hurricane savings accounts, which they could use to offset large deductibles or skip buying insurance and self-insure.
Insurers can get tax credits for writing full-coverage policies along the coast.
“I think there’s a lot of pressure on the governor to have a special session. I think we need it. We’ve got to get some help,” Russell said.
Some of that pressure also comes from the Alabama Association of Reators.
“So far, nothing has happened,” said Martha Taylor, director of the Baldwin County Association of Realtors.
Condo units on Alabama’s coast
The number of vacation short-term rental condominium units on the Alabama coast in Gulf Shores, Orange Beach and the Fort Morgan Peninsula:.
Currently, 13,169 units.
Another 1,622 units are set to open by the end of 2009.
Another 14,065 units have been permitted, with site plans approved by the regulatory agencies, but have yet to move ahead with construction for various reasons.
These numbers do not include long-term rentals, including homes and apartments.
Source: Alabama Gulf Coast Convention and Visitors Bureau.
The Associated Press
Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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