2007-03-29 / News

Council adopts insurance resolution

By Dotti Farrington

Town Councilors agreed Monday, by a vote of 3 to 0, to adopt a resolution about the growing nonrenewal of insurance for coastal properties. Two members were absent.

The action calls on Governor Donald Carcieri and state legislators to form an appropriate committee and to conduct hearings to determine the scope of insurance changes and to find solutions for affected property owners throughout the state.

The town of Westerly proposed the resolution earlier this month. Councilors here reviewed briefly the reports they have been hearing about non-renewals from several residents. Town Clerk Arlene Petit reported that she is getting increasing number of inquiries about the matter from residents who are upset and confused about the notices they are receiving.

Existing laws

The resolution notes that state laws have long existed to prohibit cancellation or non-renewal of insurance based solely on the geographic location of property. One statute specifies "making or permitting any unfair discrimination between individuals or risks of the same class and of essentially the same hazards by refusing to issue, refusing to renew, canceling, or limiting the amount of insurance coverage on a property or casualty risk because of the geographic location of the risk."

Exceptions provide that coverage changes can be made "for a business purpose that is not a pretext for unfair discrimination or that are required by law," according to the resolution. No insurance company authorized to do business in this state can cancel or refuse to issue any type of insurance coverage for an owner-occupied dwelling or personal property of every nature and description solely because of the area in which the property is located, the resolution specifies.

Residents have received notices from insurance companies about policy changes on coastal properties, according to the councilors. The actions include non-renewals, increased rates, increased deductibles and other mitigation such as storm shutters, roof tie downs and reinforced trusses, according to the resolution. The councilors said insurance actions seem to exceed actuarial practices, and are resulting in non-renewal of higher valued properties. They said the practices seem to be affecting properties more distant from the coast, up to ten miles or more, with increased costs and deductibles. One deductible cited was $20,000 on a $400,000 property.

Those factors, the councilors said in the resolution, led them to call on state officials for hearings and for relief, and to join Westerly in seeking solutions to the evolving problems.

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