Insurance may be concern after storms strike Missouri

JEFFERSON CITY, Mo. -- Victims of the storms that ripped through Missouri this week could experience further misfortune with the loss of their homeowner's insurance.

The Missouri Department of Insurance has already received two complaints from homeowners who said their insurance agents told them that if they filed a claim for damages from the recent storms, their policies would likely be dropped.

The instances of homeowner policies being canceled has risen sharply in recent years, jumping from 8,400 in 1999 to 22,000 in 2001, according to the department.

Department spokesman Randy McConnell said the trend is industry-wide and not limited to Missouri.

Once a policy is canceled, it can be difficult or expensive to find another insurance provider, McConnell said.

Although only 10 percent of Missouri policyholders file homeowner claims each year, one in five of those who do are dropped, according to the department.

Calvin Call, a Statehouse lobbyist for the Missouri Insurance Coalition, said homeowners need not be concerned.

Both McConnell and Call said insurance adjusters have already converged on the hard-hit areas of the state to assess damage and quickly begin processing claims.

With the storms that hit Southeast Missouri Tuesday coming on the heels of those that pounded the western side of the state on Sunday, the financial toll hasn't yet been calculated.

The policy cancellation issue came to the forefront after an April 2001 hail storm that caused $1 billion worth of damage in the St. Louis area. The insurance department says the policies of many homeowners who filed claims or even made inquiries about potential claims were not renewed. However, Call said the allegation isn't documented.

Sticker shock is the real reason for the negative public reaction about their homeowner's policies, Call said. Intense competition in the 1990s led to bargain rates, but now that rates have equalized some homeowners are paying substantially more for coverage.

Call said some companies found themselves paying nearly $2 in claims for every $1 collected in premiums.

"You can't stay in business very long operating like that," Call said.

A Senate committee endorsed legislation that would bar companies from canceling the policies or boosting the premiums of customers who make weather-related claims or inquires. However, after five weeks the bill still hasn't been placed on the chamber's debate calendar.

With the legislative session scheduled to end May 16, state Sen. Joan Bray, D-St. Louis, said there is little chance her bill will pass this year, though she is looking to amend it on to related legislation if the opportunity arises.

"There doesn't seem to be much movement on this issue," Bray said.

State Rep. Clint Zweifel, D-Florissant, sponsored a similar House bill that never made it past the hearing phase. He said the recent events could help build momentum for future action on the issue.

Despite the opposition from some insurance groups, Zweifel said the measure could help improve the industry's image.

"If a company is not going to stand behind you on a weather-related claim, it is hard for it to build trust," Zweifel said.

Call, the industry lobbyist, said the legislation is unnecessary and that competition is the best regulator.

"No permanent change has been made to the market that needs legislation to correct," Call said.

mpowers@semissourian.com

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