DATE: Thursday, February 27, 1997           TAG: 9702270430

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY TOM SHEAN 

        STAFF WRITER 

                                            LENGTH:   67 lines

COALITION TO EXPLORE STATE'S OPTIONS THE AVAILABILITY OF COVERAGE IN THE REGION CONTINUES TO TIGHTEN.

If large property and casualty insurance companies are reluctant to write homeowners' coverage in Hampton Roads, maybe it's time to explore new channels for providing the insurance.

That's what an informal group of two dozen agents, industry representatives and regulators hopes to do at a meeting at the state's Bureau of Insurance March 21.

Insurance agents in Hampton Roads have been wrestling with more restrictive conditions in coastal regions, including those in Virginia. Worried about the prospect of catastrophic losses if a hurricane struck the Virginia coast, several insurers boosted their rates in Hampton Roads last year and limited the amount of new insurance they would write.

Efforts to establish a hot line for area homeowners seeking coverage collapsed late last year when the group of agents, insurance company representatives and regulators could not attract enough insurance companies.

``We were looking for 30 companies, and only about three got all the necessary information to the Bureau of Insurance,'' said H.B. (Hank) Kellam, who helped organize the group.

Run by the Bureau of Insurance, the proposed hot line would have taken the names and phone numbers of homeowners trying to find coverage. These would have been forwarded to participating insurers for consideration.

The need for a mechanism that brings together homeowners, agents and insurers is still necessary, said Kellam, president of Kellam-Eaton-Huey Insurance Agency Inc. in Virginia Beach. That's because the availability of homeowners' coverage in the region continues to tighten.

``One of my insurance carriers said it is increasing its rates in Virginia between 14 percent and79 percent,'' he said. ``Where do you think that 79 percent will be? That's coming in this area. This carrier is working very hard to get out of (the Hampton Roads) market.''

Kellam declined to name the insurance company.

Many local agents endorsed a recent General Assembly bill that would have allowed insurers to write new homeowners' policies in Hampton Roads without providing coverage for windstorm damage.

The bill, sponsored by Del. George H. Heilig Jr. of Norfolk, would have authorized the Virginia FAIR Plan to write windstorm insurance for owner-occupied homes in the region. The FAIR Plan provides coverage for property owners who cannot find insurance through conventional channels.

The bill died before coming to a vote in the House of Delegates' Corporations, Insurance and Banking Committee. That was partly because agents and regulators could not determine the scope of the availability problem, said Ted Smith, president of the Independent Insurance Agents of Virginia.

When the coalition of agents, industry representatives and regulators gathers in Richmond next month, one proposal will be the creation of a ``coastal market assistance plan'' for matching homeowners seeking coverage with insurers willing to provide it, said Smith of the agents' organization.

A Norfolk insurance brokerage firm, London & Norfolk Ltd., has devised a homeowners' policy underwritten by syndicates at Lloyd's of London, the insurance market.

The policy, which offers as much as $1.5 million in coverage, was designed for expensive homes in areas like Sandbridge, Croatan and the North End of Virginia Beach, said Mike Gomez, London & Norfolk's president.

However, the cost of the policy and its high deductibles makes it suitable for only a limited number of homeowners, he said.

The policy includes a deductible of 2 percent if the home is damaged by a windstorm. If the windstorm is declared a hurricane, the deductible climbs to 5 percent. For $250,000 of coverage, a 5 percent deductible would be $12,500. KEYWORDS: HOMEOWNERS INSURANCE

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