Home Insurer to Drop 73,000 Policies in Alabama

Alabama’s second largest insurer of homes, Alfa Insurance, said it will not renew policies on one out of every six homes it insures in Alabama.

The company said it will send notices involving about 73,000 homes when they come up for renewal over the next 16 months.

Alfa’s general counsel, Al Scott, said most of the policies are with landlords who own multiple rental houses. Some are on individual homes where the owners don’t have any other insurance with Alfa. Scott said customers with homeowners insurance and either auto or life insurance won’t be affected.

Alabama’s deputy insurance commissioner, Ragan Ingram, said no other major insurer in Alabama has announced similar changes.

Alfa officials predict the tornadoes in late April will result in about 25,000 claims totaling $425 million to $475 million, which would make it the costliest storm ever for the Montgomery-based company.

Alfa President Jerry Newby said the storm’s damage is well within the coverage of Alfa’s reinsurance program, and the net impact on the company will be no greater than Hurricane Ivan in 2004. But he said the storms over the last few years prompted a review of Alfa’s procedures.

“While Alfa remains a financially strong insurance company, the increased frequency and severity of storms over the last decade have highlighted the need for Alfa to review its overall property portfolio,” Newby said.

After dropping the 73,000 policies, Alfa will still have about 330,000 policies on homes and 20,000 on businesses and churches, spokesman Jeff Helms said.

Scott said Alfa customers will get notice at least 120 days before their policies aren’t renewed, and Alfa will help them find other insurance companies.

Scott said the changes apply only to Alabama, but the company will be reviewing its policies in Georgia and Mississippi.

After the tornadoes hit in April, Alfa decided it would no longer write new policies on homes over 10 years old. Scott said that was to put a hold on new business while the company reviewed its procedures, and that will likely be modified.