New Alabama Insurance Regulation Enhances Policy Protection

The Alabama Department of Insurance (DOI) has introduced a comprehensive directive aimed at strengthening regulatory compliance requirements within the insurance industry. This new measure prevents property insurers from canceling or non-renewing policies based on losses unrelated to the specific insurance line or due to natural disasters. The regulation affects both personal and commercial property insurance providers, as well as automobile insurers operating within the state. Implementation for new policies is set for February 1, 2026, while policy renewals will adhere to the new rules starting April 1 of the same year.

Additionally, the guidelines restrict carriers from increasing premiums or imposing surcharges for claims linked to disasters or adverse weather if they are irrelevant to the insured line. While the DOI bulletin did not explicitly clarify the catalyst for these regulatory changes or detail examples of unrelated losses, industry representatives speculate that some insurers had been canceling homeowner insurance policies following auto-related claims within bundled plans. The regulation, however, does allow insurers to withdraw policies in instances of customer misrepresentation or fraud.

Underwriting provisions remain intact, permitting the discontinuation of a claims-free discount following a claim. Insurers with current rating rules conflicting with the new regulation must submit requisite amendments through the System for Electronic Rate and Form Filing (SERFF). Payers, providers, and other stakeholders with inquiries about these insurance directives are encouraged to contact the DOI at rates.forms@insurance.alabama.gov.