HB321 Alabama 2016 Session

Summary

Primary Sponsor

Joe Faust

Republican

Session

Regular Session 2016

Title

Insurance, Alabama Coastal Insurance Authority, create to provide affordable windstorm insurance in areas contiguous to Gulf of Mexico and Mobile Bay, Board of Directors, plan of operation and sale of bonds provided, commissioner authorized to require quarterly reports, authority authorized to assess policyholders of excess losses, Secs. 27-22B-1 to 27-22B-12, inclusive, added; Sec. 27-1-24 repealed

Summary

HB321 would create the Alabama Coastal Insurance Authority to provide affordable windstorm insurance for coastal Alabama and shift coverage from the Alabama Insurance Underwriting Association.

What This Bill Does

It establishes the Alabama Coastal Insurance Authority as a separate state entity to offer affordable windstorm insurance in Gulf of Mexico/Mobile Bay counties. It sets up a board, a plan of operation, and a process for post-loss assessments to cover losses beyond reserves. It authorizes the authority to issue bonds, requires unsold bonds after 60 days to be bought by assessable insurers in proportion to their participation, and gives the Commissioner of Insurance oversight including quarterly/annual financial statements and rate/form filing. It also provides tax exemptions, allows assessments on policyholders and insurers to cover excess losses, enables securing payments with liens and collection via county tax offices, requires licensed producers, and clarifies that the authority’s debts are obligations of the authority only, not the state, with a transition from the current association.

Who It Affects

• Coastal property owners in counties contiguous to the Gulf of Mexico and Mobile Bay: could pay assessments if losses exceed reserves, but may benefit from post-loss financing and potential rate reductions.
• Assessable insurers (property insurers doing business in Alabama): must participate in bond purchases if bonds remain unsold after 60 days and can recoup assessments from policyholders.
• Licensed insurance producers: required to handle applications and policies for the authority.
• Local governments and coastal communities: may be involved in funding or supporting programs through bonds or assessments, with debt obligations tied to the authority rather than the state.

Key Provisions

• Creates the Alabama Coastal Insurance Authority (Chapter 22B) to provide affordable windstorm insurance for coastal counties.
• Defines terms such as affordable windstorm insurance, assessable insurer, and percentage of participation to determine bond purchases.
• Sets composition of the Board of Directors, including recommendations from major insurers, producers, and coastal business leaders, with diversity requirements.
• Authorizes the sale of bonds and requires unsold bonds after 60 days to be purchased by assessable insurers in proportion to their participation; bonds are not a state debt.
• Allows post-loss assessments first to policyholders (up to the rate reduction amount) and then to assessable insurers; permits recording liens and collection through county tax offices; insurers may recoup assessments from policyholders.
• Requires the authority to use licensed insurance producers and to file forms/rates with the Commissioner of Insurance; permits plan of operation to include post-loss financing programs aimed at reducing wind insurance premiums.
• Provides tax exemptions for the authority, its bonds, and income; authorizes investment and use of bond proceeds to support operations and claims payments.
• Ensures bonds and authority revenues are insulated from state taxation and that debts are solely the authority’s obligations.
• Authorizes discontinuation of the Alabama Insurance Underwriting Association to enable a smooth transition to the new authority and repeals Section 27-1-24 accordingly.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Property Insurance