CurrentAlabama Department of InsurancePolicy N/A

Implementation of Alabama Act 2009-500 — premium discounts or rate reductions for fortified one- or two-family dwellings

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Governs implementation of Alabama Act 2009-500 requiring Alabama-admitted property and casualty insurers to offer premium discounts or rate reductions to owners of certain fortified or retrofit one- or two-family dwellings located in Mobile and Baldwin Counties, and sets filing, notice, and eligibility requirements.

Policy Summary

PayerAlabama Department of Insurance

PolicyImplementation of Alabama Act 2009-500 — premium discounts or rate reductions for fortified one- or two-family dwellings

Policy CodePolicy N/A

Change TypeNo material changes

Effective DateMay 14, 2009

Next Review DateN/A

Key ActionFile an actuarially-justified rating plan recognizing required premium discounts or rate reductions with the Department by January 1, 2010 (or elect discounts at or above Department benchmarks).

SourceLink

POLICY UPDATE CHANGES

No material clinical or coverage changes in this revision.

Mobile, BaldwinGeographic scope

May 1, 2010Discounts apply from

Jan 1, 2010Filing deadline

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CurrentAlabama Department of InsurancePolicy N/A

Implementation of Alabama Act 2009-500 — premium discounts or rate reductions for fortified one- or two-family dwellings

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Policy Summary

PayerAlabama Department of Insurance

PolicyImplementation of Alabama Act 2009-500 — premium discounts or rate reductions for fortified one- or two-family dwellings

Policy CodePolicy N/A

Change TypeNo material changes

Effective DateMay 14, 2009

Next Review DateN/A

SourceLink

POLICY UPDATE CHANGES

No material clinical or coverage changes in this revision.

Mobile, BaldwinGeographic scope

May 1, 2010Discounts apply from

Jan 1, 2010Filing deadline

Eligibility and Required Offerings

Eligibility and insurer obligations

Properties eligible for required premium discounts or rate reductions must meet ONE of the following construction or retrofit standards; insurers also have filing, notice, and application obligations.

ANY of the following

New one- or two-family detached dwellings (including certain modular homes, but excluding manufactured homes) that have been designed and constructed in conformity with, and certified as meeting, the Fortified ‘for safer living’ standards promulgated by the Institute for Business & Home Safety (IBHS).
New one- or two-family detached dwellings that have been designed and constructed in conformity with, and certified as meeting, the requirements of the 2006 International Residential Code for One- and Two-Family Dwellings (including the design criteria applicable to construction in hurricane-prone regions).
Existing one- or two-family detached structures that have been retrofitted and certified as meeting Level 1, Level 2, or Level 3 hurricane mitigation measures in the Fortified: Existing Homes program (IBHS).
Existing one- or two-family detached structures that have been retrofitted and certified as meeting the requirements of any other standardized code submitted by an insurer and approved by the Commissioner.
Manufactured homes designed and manufactured to comply with Federal HUD construction and safety standards applicable to Wind Zone III (24 C.F.R. § 3280.305) and certified as meeting the Fortified: Existing Homes program requirements.

ALL of the following

The premium discount or rate reduction must be offered to the owner of an eligible property whether or not the property is owner-occupied.
The Act does not require discounts or rate reductions for condominiums, apartment buildings, commercial properties that do not meet the eligible-property definition, or for renter/tenant policies.

ALL of the following

Insurers must offer the discounts or rate reductions for eligible properties located in Mobile County and Baldwin County, Alabama; insurers are strongly encouraged to make such discounts available elsewhere in Alabama.

ALL of the following

Insurers must file actuarially-justified rating plans recognizing the required premium discounts or rate reductions with the Department of Insurance by January 1, 2010, unless the insurer elects to file discounts equal to or exceeding Department benchmark discounts published in SERFF, in which case actuarial justification is not required.
Insurers with approved filings must notify insureds in Mobile and Baldwin Counties in writing at the next policy renewals on or after May 1, 2010, about the availability of discounts, the general nature of the improvements or documentation required, and where detailed standards information can be obtained.
If a property becomes eligible during a policy term, the insurer must apply the discount or rate reduction for the remainder of the coverage term.
Failure to file required rating plans by the January 1, 2010 deadline may result in Department action under the Insurance Code.

ALL of the following

The Act became effective May 14, 2009, and applies to new policies written or existing policies renewed on and after May 1, 2010.

Filing benchmark threshold (operational note)

If an insurer elects to file discounts equal to or exceeding the Department benchmarks published in SERFF, the insurer need not provide separate actuarial justification for the filing.

Standards, Benchmarks, and Filing Rules

Eligible construction/retrofit standardsmixedCovered

Fortified standards / 2006 IRC / Fortified: Existing Homes Levels 1-3

Construction or retrofit certifications that qualify property for discounts under the Act.

Filing benchmark threshold

Benchmark ruleIf an insurance company elects to file discounts or reductions equal to or exceeding the Department's benchmark discounts published in SERFF, the company is not required to file actuarial justification.

Filing deadlineActuarially-justified rating plans must be filed with the Department by January 1, 2010 unless electing benchmark-level discounts.

PurposeAllows timely review and approval so approved rates can be in use by May 1, 2010.

Insurer Filing, Notice, and Mid-term Requirements

Prior Authorization

File rating plans by Jan 1, 2010 — benchmark option available

Each affected insurer must file an actuarially-justified rating plan with the Department recognizing the required premium discounts or rate reductions by January 1, 2010, to allow review and approval for use by May 1, 2010. Insurers that elect to file discounts or reductions equal to or exceeding the Department's benchmark discounts published in SERFF are not required to submit actuarial justification.

Deadline to file: January 1, 2010
If filed discounts >= Department benchmarks published in SERFF, actuarial justification is not required
Failure to file by January 1, 2010 may result in Department action under the Insurance Code

Documentation Required

Provide written notice to insureds at next renewal on/after May 1, 2010

Insurers with an approved rate filing must notify all insureds in Mobile and Baldwin Counties in writing at the insureds' next policy renewals occurring on or after May 1, 2010, about availability of the discounts or rate reductions, the general nature of improvements and documentation required, and where detailed standards information may be obtained.

Property Types and Eligibility Definitions

One- or two-family detached dwelling — eligibility criteria

Eligible property typeOne- or two-family detached dwelling (including a modular home as defined in 24 C.F.R. § 3282.12, but excluding a manufactured home).

Fortified standardDesigned, constructed, and certified as meeting the Fortified for Safer Living standards promulgated by the Institute for Business & Home Safety (IBHS).

2006 IRCDesigned, constructed, and certified as meeting the 2006 International Residential Code for One- and Two-Family Dwellings, including hurricane-prone region design criteria.

Retrofitted existing homesExisting structures retrofitted and certified to Level 1, Level 2, or Level 3 hurricane mitigation measures in the Fortified: Existing Homes program qualify.

Alternate codesExisting structures retrofitted and certified to any other standardized code submitted by an insurer and approved by the Commissioner also qualify.