Lawmaker, Insurance Industry Battle Over Property Insurance Cancellation Bill

By John Celock

A Kansas lawmaker is seeing opposition from the insurance industry over legislation that she has proposed that would prohibit insurance companies from not renewing homeowners insurance over weather related claims.

Rep. Susan Concannon (R-Beloit) told The Celock Report that residents of her community started seeing a spike in cancellations from insurance companies following a series of three devastating storms last year. Her legislation, which would prohibit the practice, received a hearing before the state House Insurance Committee Monday afternoon. At the same time she is battling the insurance industry, which says the bill could lead to Kansas residents having less insurance availability.

“Common sense tells me, though, that storms hitting different parts of the state balance out,” Concannon said in testimony prepared for the hearing. “Common sense also tells me that these homeowners who have purchased policies for decades with no claims, do not deserve to be treated like this. The company has made a lot of money on them. Then, two weather related claims and they are not renewed.”

Concannon said that three extreme wind and hail events in the Beloit area within weeks of each other last year prompted the bill. Among the events she cited were a Aug. 31 storm that saw softball size hail pelt the community for 50 minutes, damaging most roofs in town. She also cited a hailstorm two weeks prior and a subsequent storm just south of Beloit.

Concannon noted that Mitchell County has seen five major storms in five years and noted that her family had filed only one hail claim on their property insurance in the 28 years they have resided in Beloit.

Concannon said that residents started discussing the cancellations in the weeks following the storms, leading to questions over how weather could cause a cancellation. She said that her research showed that Texas, Arkansas and Illinois ban the practice currently.

She noted her research showed the practice had not been tolerated by the state Department of Insurance in prior years.

“Some nonrenewals were multiple claims from one storm (i.e. roof and auto).” Concannon said in her written testimony. “There was one homeowner who didn’t even have auto insurance with the same company, but his homeowner’s found out about a hail claim on his car (filed with a different company), declared him a risk and cancelled. “

Insurance industry representatives said that the bill would hurt the industry and consumers around the state. Kelly Carpenter, the vice president for government affairs at Property Casualty Insurers of America, told The Celock Report that Concannon’s bill would hurt the insurance industry’s ability to assess risk in the state and could lead to less insurance being available for Kansas residents.

“Just because a claim is weather related doesn’t mean that all of the damage is out of the control of the policy holder,” Carpenter said. “It is also the responsibility of the policy holder to maintain their property,”

Carpenter said examples would include damaged roofs. She said that damage from the storm could be made worse by lack of maintenance of the roof by the homeowner prior to the storm. She said Concannon’s bill would provide “disincentives” for maintenance.

Carpenter said that her group wants to create an environment that maintains “the most available and affordable insurance market.” She said that under the current system Kansas residents have many other insurers that they can go to. She said the passage of Concannon’s bill could cause insurers to leave the state since it would be harder to assess risk.

“It is not a common course of action for insurance companies,” Carpenter said of cancellations. “In the event it does happen there are other options and other companies for a customer to go to. We are not seeing an availability crisis in Kansas.”

Concannon told The Celock Report that she questioned Carpenter’s comments, noting that she has seen people taking precautions have their policies cancelled.

“You cannot prevent damage from tornados or severe hail,” Concannon said. “In a policy holder, by the recommendation of his agent put on a hail resistant roof. The hail was so bad it destroyed the roof. They were dropped. That comment is laughable.”

During the hearing, Concannon noted that Rep. Tony Barton (R-Leavenworth) asked about precautions that could be taken for tornados or large-scale hail, saying that no answer was provided.

Concannon stressed she is not against the insurance industry but rather is seeking to provide assistance to consumers in the state. She noted that Kansas residents pay higher property insurance rates due the state’s weather conditions. At the same time she noted that she leaned that 250 insurance policies were canceled in the 2000 person community of Dighton, Ks. following storms.

Concannon said she is hoping for the Insurance Committee to move forward with the legislation. Carpenter said that in her experience while these bills have been common in other states, she believes Kansas lawmakers will see the potentially adverse impact.

“There are a lot of conversations to be had. We see these types of bill come up across the country especially after storms. It is important to have these conversations,” she said. “Generally what we have found is when these bills come up is the policymakers see the unintended consequence actions of the policies”