NOTE:  As provided in LFC policy, this report is intended only for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used for other purposes.

 

The most recent FIR version (in HTML & Adobe PDF formats) is available on the Legislative Website.  The Adobe PDF version includes all attachments, whereas the HTML version does not.  Previously issued FIRs and attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

 

 

F I S C A L   I M P A C T   R E P O R T

 

 

 

SPONSOR:

Maes

 

DATE TYPED:

2/24/03

 

HB

 

 

SHORT TITLE:

Homeowner’s Insurance Raises & Cancellations

 

SB

811

 

 

ANALYST:

Wilson

 

APPROPRIATION

 

Appropriation Contained

Estimated Additional Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

FY03

FY04

 

 

 

 

 

NFI

 

 

 

SOURCES OF INFORMATION

 

Responses Received From

Public Regulation Commission (PRC)

 

SUMMARY

 

     Synopsis of Bill

 

Senate Bill 811 prohibits an insurance company from canceling, refusing to renew or raising the premium on a home-owner’s policy solely because the policyholder has submitted a property claim. 

 

     Significant Issues

 

Over the last few years many insurance companies have lost money from this product line due to the rapidly escalating incidence of mold claims and other water-related homeowners claims.  Many insurance companies have been responding by canceling or not renewing home owners submitting such claims.  Cancelled or not renewed, homeowners often have difficulty obtaining homeowner’s insurance elsewhere at an affordable price because their claims have been submitted to CLUE, a nationwide data bank of homeowner’s claims that most insurance companies participate in and review when assessing applications for insurance.   Through the use of such CLUE reports, homes that have submitted water-related claims are in essence becoming “blacklisted” throughout much of the insurance industry. 

 

 The PRC notes rather than raising premiums, most insurance companies simply do not renew, or cancel policies, with a history of water-related claims. 

 

TECHNICAL ISSUES

 

The PRC suggests clarifying the language of SB 811 by merging sections A & B and  inserting “an insurer shall not cancel, fail to renew, or increase the renewal premium of a homeowner’s insurance policy” instead of  “the rates of an insurer of homeowner’s casualty shall not provide for an increase in the premium”.

 

DW/njw