THE VIRGINIAN-PILOT 
              Copyright (c) 1997, Landmark Communications, Inc.

DATE: Wednesday, January 8, 1997            TAG: 9701080336
SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 
SOURCE: BY TOM SHEAN, STAFF WRITER 
                                            LENGTH:   56 lines

STATE-APPROVED ORGANIZATION WOULD WRITE WINDSTORM POLICIES UNDER PROPOSED BILL

Responding to complaints about the reduced availability of homeowners' insurance in Hampton Roads, a delegate to the General Assembly from Norfolk has proposed that a state-approved organization offer separate windstorm insurance to coastal residents.

The bill, to be filed today, would allow property insurers to exclude coverage for wind-related losses in the new homeowners' policies they write in eastern Virginia.

Some major insurers, including Allstate and State Farm, imposed hefty increases in their rates for homeowners' insurance in Hampton Roads last year because of the threat of hurricanes and wind-storms in the region. Insurance agents reported that several other companies also raised their rates and reduced the amounts of coverage they provided in the region.

Del. George H. Heilig Jr. of Norfolk said Tuesday he was sponsoring the bill because of complaints from homeowners, real estate agents and insurance agents in his district, which includes Willoughby Spit and part of Ocean View.

Heilig's bill would authorize the Virginia Property Insurance Association - known as the Virginia FAIR Plan - to write policies for windstorm damage to owner-occupied dwellings.

Like the assigned-risk pool for auto insurance, the property insurance association provides more costly coverage for individuals who cannot find insurance in the regular market.

Heilig chairs the House of Delegates' committee on corporations, insurance and banking. His bill would not address the availability of insurance for flood damage, which is available only through afederal program.

According to a draft of Heilig's bill, the plan for offering separate windstorm insurance would apply only to homeowners in eastern Virginia. This would include all of Virginia Beach, Chesapeake, Norfolk, Portsmouth and Hampton. Parts of Suffolk, Newport News, Gloucester County and other jurisdictions along the Chesapeake Bay would be included in the plan.

Some insurance agents in Hampton Roads might welcome the proposal, but Heilig's bill probably will encounter opposition from parts of the insurance industry, said Charles Cralle of Henderson and Phillips Insurance, a Norfolk-based agency.

If policies for windstorm damage became available through a state-approved plan, some insurers might stop writing homeowners' policies in Virginia, Cralle predicted. ``There might be a self-fulfilling prophecy,'' he said.

That's because all companies writing homeowners' policies in the state would have to share losses suffered by the Virginia FAIR plan from its windstorm policies.

When announcing their increases in rates for homeowners' insurance last year, some insurers cited the risk of catastrophic losses from hurricanes and said they wanted to reduce the concentration of policies written along the Atlantic coast.

At least a half-dozen southeastern states along the Atlantic and Gulf coasts, including Florida and the Carolinas, already have programs offering windstorm policies separately from regular homeowners' insurance.

KEYWORDS: INSURANCE GENERAL ASSEMBLY PROPOSAL