Conn. Agents: Coastal Markets Tough But Insureds Getting Coverage

September 22, 2006

About three-quarters of the 21 agents writing Connecticut coastal business say homeowners insurance markets are either “worse” (43 percent) or “much worse” (33 percent) compared to one year ago.

Despite restrictions in the marketplace, agents say that few homeowners are being turned away by agents for lack of a market.
The Professional Insurance Agents of Connecticut Inc. surveyed its members who do a significant amount of coastal business.

For commercial property more than half (59 percent) of 22 respondents said availability is the same as a year ago. Fourteen percent said commercial markets are “worse,” and 23 percent said they are “much worse” than last year.

In personal lines, agents reported an average of 6.6 Connecticut-licensed insurance markets for homeowners, but said nearly all (an average of 6.4) of these insurance companies have underwriting guidelines imposing restrictions in coastal areas.

Markets may be worse than last year but homeowners are still finding coverage. Two-thirds (67 percent) of respondents said they have not turned away any customers in the past three months. However, some clients are being placed in markets other than standard voluntary-market homeowners companies. About four in 10 agents (38 percent) said they are using surplus lines insurers. These agents reported going to the non-licensed market for an average of 9 percent of their current coastal homeowners applicants. Such placements typically involve coverage concessions.

Even fewer applicants are winding up in the state’s residual market, the Fair Access to Insurance Requirements (FAIR) Plan. Only 19 percent of respondents said they currently are procuring FAIR Plan dwelling policies for coastal applicants. FAIR Plan coverage is less broad than that of homeowners or commercial property policies.

New London County was identified by respondents as the area where it is most difficult to place homeowners policies (38 percent), followed by New Haven County and Middlesex County (19 percent each).

Some respondents’ comments indicate they believe the situation will worsen. “Seems to be trending negatively,” said one respondent. “The real problems will emerge in early 2007 as reinsurance markets renew treaties,” said another agent.

On the commercial property side, agents surveyed reported having an average of five commercial property markets, of which the majority has coastal underwriting restrictions, especially restrictions involving distance to the coast. Little of the respondents’ commercial property business is being written with surplus lines insurers (about 2 percent) or the FAIR Plan (1 percent).

Source: PIACT

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