SB298 Alabama 2016 Session

Summary

Primary Sponsor

Bill Hightower

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authorized to assess policyholders of excess losses, Secs. 27-22B-1 to 27-22B-12, inclusive, added; Sec. 27-1-24 repealed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

The bill creates the Alabama Coastal Insurance Authority to provide affordable windstorm insurance for properties in Gulf of Mexico and Mobile Bay counties, replacing the Alabama Insurance Underwriting Association and establishing a new bond-based financing and assessment system.

What This Bill Does

It establishes the Alabama Coastal Insurance Authority (ACIA) as a separate state entity to offer affordable windstorm insurance in eligible counties. It sets up a 13-member board, a plan of operation with post-loss assessments, and authority to issue bonds funded by assessments on insurers and policyholders. It also provides tax exemptions for the authority, requires use of licensed producers, and allows orderly transition from the existing association to the new authority.

Who It Affects

• Policyholders in counties contiguous to the Gulf of Mexico and Mobile Bay who would gain access to affordable windstorm insurance and could be assessed for excess losses; they may also face liens and have assessments recouped by their insurer.
• Assessable insurers (property insurers authorized to write in Alabama) who must participate, purchase unsold bonds if needed, pay assessments, and may pass those costs to policyholders; they may recoup assessments and must work through licensed producers.

Key Provisions

• Creates the Alabama Coastal Insurance Authority (ACIA) as a separate state entity to provide affordable windstorm insurance in eligible coastal counties; repeals the Alabama Insurance Underwriting Association (AIA) effective December 31, 2018.
• Board of Directors: 13 members (plus the State Director of Risk Management), with specific appointments from largest insurers, other insurers, insurance producers, and business leaders; terms and diversity requirements defined.
• Plan of Operation: approves post-loss assessment procedures, including a first level to policyholders (up to the rate reduction amount) and a second level to assessable insurers; may reduce premiums through post-loss financing plans.
• Bond financing: ACIA may issue bonds; if 60 days pass with unsold bonds, assessable insurers must purchase their share based on current participation; bonds treated as assets of insurers and not state debt.
• Financial oversight: Commissioner may require quarterly/annual financial statements and rate/form filing; ACIA pays certain examination and filing fees but is exempt from other department taxes.
• Tax exemptions: ACIA and its bonds, income, and related property are exempt from state taxes; debt obligations are not state debts.
• Assessments and liens: ACIA can assess policyholders for excess losses, record property liens to secure payments, and collect via county tax officials; may charge a reasonable collection fee.
• Recoupment: assessable insurers can recoup ACIA assessments from policyholders.
• Producer requirement: ACIA must use licensed insurance producers for applications and sales;
• Transition and dissolution: Commissioner may discontinue AIA to allow orderly transition; procedures for dissolution and handling of ACIA assets and debts defined.
• Open records and confidentiality: ACIA generally subject to Open Meetings/Records Acts, with specific confidential exemptions (underwriting files, claims files, audits, attorney-client communications, etc.).
• Nonprofit and open-ended authority: ACIA operates as a nonprofit with tax-exempt status for bonds and income; it can borrow, pledge revenues, and enter contracts as needed to fulfill its purpose.
• Local government involvement: units of local government may issue bonds or participate to fund loss deficits, with repayment secured by ACIA-generated revenues rather than state backing.

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