The Alabama legislature and Governor Don Siegelman recently approved and signed two bills into law. The American Insurance Association (AIA) commended the legislature and Governor Siegelman for approving the laws, noting that these laws will allow for significant changes in the insurance industry.
The first law, Boiler and Pressure Vessel Safety Act, will provide comprehensive public safety regulations for boilers and pressure vessels in Alabama. Insurers have long played a leading role in the area of boiler and pressure vessel safety, acting as special inspectors who inspect for violations of state law on behalf of the state. "We believe that with the enactment of this law, Alabama has taken the steps necessary to create a modern, effective system for the regulation of boilers and pressure vessels in the state," said Eric Goldberg, AIA senior counsel. "This legislation will help to protect the safety of Alabama's citizens and preserve the property of its schools, hospitals and businesses."
The act also established the Board of Boiler and Pressure Vessels, a body in charge of formulating regulations for the safe construction, installation, maintenance, inspection and repair of boilers. AIA will be participants of this board.
The second law, which was sponsored by the AIA, will reform Alabama's insurance guaranty fund. Alabama becomes the latest state to approve long-needed changes in its state guaranty fund, ensuring that policyholders are protected from absorbing the losses incurred by large companies who purchase insurance from companies that become insolvent.
"Guaranty fund reform has been a priority issue for AIA in recent years," said C.D. Dorsey, AIA vice president, southeast region. "When guaranty association legislation was first adopted on a widespread basis in the late 1960s, virtually all insolvencies were personal lines insurers. No one at that time could have conceived that commercial lines would present the problems that they do today." As a result, no consideration was given to the inequities of having all policyholders absorb the losses incurred by businesses as a result of their purchasing insurance from a company that became insolvent. The new law assures that businesses that can afford to sustain an insurance loss themselves when the insurer they selected is unable to pay will not be subsidized by less affluent policyholders.
District of Columbia, Alabama, South Carolina
State Farm adjusts insurance rates, introduces discounts
State Farm Mutual Automobile Insurance Company, the nation's largest auto insurer, is adjusting its insurance rates in the District of Columbia, Alabama and South Carolina.
For the District of Columbia, the new rate was effective July 15. Premiums will increase for some policyholders and decrease for others, but there will be no change in the company's overall rate level. As part of the rate adjustment, State Farm introduced a 5% premium discount for eligible new customers in the district.
For most State Farm policy-holders in the District of Columbia, premiums will drop for the personal injury protection coverage and for the comprehensive coverage, which pays for losses resulting from theft, vandalism, fire, storm damage and glass breakage. Prices for liability coverage will increase.
In Alabama, State Farm lowered the insurance rate level to an average of 2.3%. The rate decrease became effective May 1. This decrease represents an annual savings of $9.1 million to the company's Alabama policyholders. Overall premium changes for individual motorists will vary depending upon factors such as the coverages they carry, where they live and the kind of car they drive.
State Farm policyholders in South Carolina saw an increase in rates on June 1. The overall effect was a nine-tenths of 1% increase in the company's South Carolina premium level. As part of the rate reduction, State Farm introduced a 5% premium discount for eligible new customers in that state.
Georgia
Atlanta firm merges with Synaxis Group, Inc.
Westcott & Associates, Inc., a leading property and casualty insurance agency in Atlanta, has joined Synaxis Group, Inc., which is headquartered in Nashville, Tennessee. Westcott's operations will be combined with Atlanta-based Merritt & McKenzie, Inc., which operates in Synaxis' hub in Georgia.
Synaxis links major regional brokers with strong community-based agencies a "hub and spoke" network. This promotes cross-selling of products and services, provides financial and human resources for growth and streamlines administrative functions.
Westcott & Associates offers property and casualty insurance products to commercial clients in diverse fields such as property management, lumber, forestry and logging operations and the construction industry. Through Merritt & McKenzie and Synaxis, Westcott's clients will have access to a broader array of property, casualty and surety products and to comprehensive benefit programs including group health, life and disability coverage, retirement plans, key person protection and deferred compensation. *