Breaking new ground: Alabama's captive plan aims to lower homeowners premiums

Captive insurance companies traditionally insure commercial lines, but Alabama is on track to creating a new use--a captive that provides homeowners insurance to residents of its hurricane-exposed coastal municipalities.

"It's an interesting concept," said Denhis Harwick, president of the Minneapolis-based Captive Insurance Companies Association. "The nature of the beast is commercial lines rather than personal lines. I suspect that's something that regulators would be leery of. Their comfort level with captives involves the fact that they have sophisticated consumers who are essentially self-insuring, and that obviates a lot of the consumer-protection role that a regulator has."

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