Alabama's leading homeowners insurer is cutting back its catastrophe exposure in coastal territories around Mobile Bay.

State Farm has announced it is not writing new wind and hail policies for homes south of Interstate 10 in Mobile County, and generally along the Highway 98 corridor in Baldwin County, beginning April 1. Homeowners here will likely turn to the Alabama Insurance Underwriters Association, which has about 9,100 policies.

"It was a tough decision but this is an ongoing process to reduce exposure so that we are able to respond to the needs of all of our policyholders," said State Farm spokesman David Majors.

There will be no changes to existing State Farm policyholders unless they move to an area in which the company is no longer writing new business or an area where State Farm is no longer offering wind and hail coverage, Majors said.
In addition, the company said it would require a 5% hurricane deductible from many other homes within Mobile and Baldwin counties not included within the latest cutback unless the home has a "Fortified...for safer living" certificate from the Institute for Business and Home Safety. Requirements for homes to receive this distinction include newer tile or shingle roofs that have proper tie-downs, hurricane shutters and hurricane-resistant windows and reinforced garage doors.

Majors said State Farm continues to have a "good relationship" with the Alabama Insurance Department and meets with the agency regularly.
In February 2007, the company said it was not renewing homeowners coverage for 2,600 policyholders located on Alabama's coast (BestWire Feb. 5, 2007). Allstate and Alfa Insurance also announced cutbacks in coastal areas following Hurricane Katrina.

The average premium for Alabama homeowners was about $847 in 2005, according to the National Association of Insurance Commissioners.

In 2006, the top five writers of homeowners multiperil in Alabama, according to A.M. Best Co. state/line product information based on direct premiums written, were: State Farm Group, with a 29.1% market share; Alfa Insurance Group, with 20.4%; Allstate Insurance Group, with 12.3%; Farmers Insurance Group, with 7%; and Travelers Insurance Cos., with 4.6%.