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

DATE: Friday, January 24, 1997              TAG: 9701240530
SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 
SOURCE: BY TOM SHEAN, STAFF WRITER 
DATELINE: RICHMOND                          LENGTH:   51 lines

BILL DELAYED THAT WOULD LET POLICIES OMIT WIND DAMAGE

Facing objections from insurance companies and agents, a House of Delegates committee delayed action Thursday on a bill that would let insurers write homeowners' policies in coastal areas such as Hampton Roads without providing coverage for windstorm damage.

Del. George H. Heilig Jr. of Norfolk, the bill's sponsor and chairman of the House Committee on Corporations, Insurance and Banking, also named a three-member subcommittee to consider industry proposals for amending his measure. The trio, he said, will meet Monday and make its recommendations to the committee on Tuesday.

In addition to letting insurers exclude coverage for windstorm damage to owner-occupied homes, Heilig's bill would direct the Virginia Property Insurance Association to provide that coverage. The state-approved organization, known as the Virginia FAIR Plan, is the market of last resort for homeowners who cannot find insurance through conventional sources.

The mechanism proposed in Heilig's bill would not affect existing homeowners' policies.

It would apply to new policies written in Chesapeake, Norfolk, Portsmouth, Virginia Beach, Hampton, Newport News and Poquoson. The mechanism also would apply to eight coastal counties, including York, Gloucester, Accomack and Northampton.

Some insurers have stopped writing homeowners' coverage in Hampton Roads in recent years. Others have raised their rates and reduced the amount of new coverage they will provide.

However, Phil Morris, legislative liaison for insurer State Farm, questioned whether Heilig's bill was necessary. The Virginia Bureau of Insurance, he told the committee, has received very complaints from homeowners on its telephone hot line.

``They're not calling the hot line. They're calling their insurance agents and Realtors,'' Heilig replied.

Morris and other lobbyists expressed concern that Heilig's proposal would worsen the problem of insurance availability. Given the opportunity, some companies would write only the profitable parts of homeowners' coverage and let the Virginia FAIR Plan pick up the riskier windstorm coverage, they said.

James Roberts, a Richmond lobbyist for the American Insurance Association, proposed that Heilig's plan be restricted to owner-occupied homes within 1,000 feet of the Atlantic Ocean or the Chesapeake Bay and its tributaries.

Before homeowners are allowed to use windstorm coverage under the FAIR Plan, they should be required to seek conventional coverage from at least three companies and be rejected, Roberts said.

He also asked that the special treatment of windstorm coverage expire on or after Jan. 1, 1999.

KEYWORDS: GENERAL ASSEMBLY INSURANCE INDUSTRY