The recent events surrounding Augusts’ Hurricane Irene has prompted insurance regulators in Connecticut to take a bold stance in determining how insurers should respond to future hurricanes. The state’s Department of Insurance has begun revising a number of guidelines governing the insurance industry’ sometimes suspect hurricane deductibles. Regulators began reviewing changes to the system shortly after the storm, but only now have they reached a consensus on how far to take them. The Department of Insurance is looking to change the guidelines to make them more consumer friendly.
Hurricane deductibles have been a subject of controversy in Connecticut, as well as its neighbors. In the wake of Hurricane Irene, East Coast insurers had been charging high deductibles to help offset the impact of insured losses. The problems stems from the fact that Irene was not actually a hurricane by the time it reached North Eastern states – having lost that status while moving through the South. A tropical storm does not illicit the charging of hurricane deductibles, according to regulators, so they are making sure companies will have more clear guidelines on which to base this practice on in the future.
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The new rules would mean that insurers would only be able to charge deductibles for hurricanes whose winds reach 74mph or higher. Connecticut’s current rules allow companies to charge deductibles based solely on whether the National Hurricane Center declares a hurricane. Senator Richard Blumenthal of Connecticut says that the old rules were a result of post-Katrina fears and no longer apply to today’s economic climate.