Speaking at the May 22 meeting of the Mathews Board of Supervisors, Gwynn’s Island resident Judy Rowe warned of an impending insurance crisis in the county.

Rowe told the board that her 19-year policy with Farm Bureau Insurance had been cancelled, in spite of the fact that her payments had always been made on time, she had filed only minor claims over nearly two decades, and had filed no claims at all in 2011 or for 2003’s Hurricane Isabel or 2006’s Tropical Storm Ernesto.

"Water does not even come up in my yard," she said.

The problem, Rowe explained, is that Farm Bureau lost a lot of money in 2011 because of storms, tornadoes and other natural disasters, and so decided to cancel every policy holder in Virginia who has only property insurance and no other supporting business. This will occur monthly over the next year, she said.

Rowe said that Farm Bureau’s notification had allowed her only 28 business days to find new insurance coverage, and that she had spent endless hours on the telephone, in insurance offices, searching the internet, and writing letters looking for other possibilities. There are 15 insurance companies on the Coastal Insurance Hot Line list, she said, but 12 of them will no longer write insurance within 2,500 feet of the shoreline.

"That equates to 140 feet short of a half mile!" she said.

Of the three remaining insurance companies on the list, Rowe said one is not writing any new policies in Mathews County, another has offered her insurance at a rate increase of 62.5 percent, and the third has scheduled an inspection of her house.

"What is this going to do to the value of my property?" said Rowe. "I will not be able to sell my house if the buyer cannot get insurance. This would be a disaster for me or for my heirs."

Rowe said further that if a mortgage holder’s insurance is cancelled, the mortgage can be called in, which could be a disaster for the banks. It could also lead to lower property values and decreased tax income for the county, which "would be a disaster for Mathews County."

She asked that supervisors speak with state and federal legislators and ask them to take action.

"This is real," she said. "This is today."

Farm Bureau

Greg Hicks, vice president of communications for the Virginia Farm Bureau Federation, confirmed Rowe’s remarks during a telephone interview but said it’s not as bad as it sounds.

While there’s "an industry-wide situation" related to catastrophic losses in 2011 due to tornadoes, hurricanes, thunderstorms and winter storms, Farm Bureau is not abandoning its customers, he said. Instead, agents across Virginia are trying to help their customers find new insurance coverage with companies that specialize in homeowners insurance and can possibly give them a better rate than Farm Bureau can manage at the moment.

There are about 10 companies that Farm Bureau will be working with, Hicks said. Those companies are smaller, and their specialty is high-risk homeowner’s insurance. He said some of them have offices in Gloucester and Mathews, but he declined to give any names.

Farm Bureau agents will service policies with those companies, he said, and the property owners can continue to go through Farm Bureau with their claims.

"It should be pretty much seamless, except with a different company," he said. He did not address Rowe’s specific situation.

Hicks said that Farm Bureau deals mainly in automobile, crop and farm owners insurance and holds only 3.4 percent of the statewide market for homeowners’ insurance. Those people with more than one policy with the company will continue to have their homes covered, he said.

Insurance companies across the industry are divesting themselves of homeowners’ coverage, said Hicks. In the 10 years before 2011, he said, the average property loss nationwide was $23.8 billion per year. That average was higher than usual, he said, because Hurricane Katrina—the worst year in the history of insurance losses—occurred during that period. In 2011, he said, losses amounted to $35.9 billion industry-wide, $12.1 billion more than that 10-year average.

This is the first time Farm Bureau has taken so many homeowners off its books at once, said Hicks, "at least in my 20-odd years with the company. We had to do it to mitigate future financial risk."

Virginia Bureau of Insurance

George Lyle, supervisor of the property and casualty consumer service section of the State Corporation Commission’s Bureau of Insurance, said that coastal and waterfront property insurance coverage "has been an area of concern for some time," but he denied that there’s an impending crisis in Virginia’s insurance industry.

"We have a healthy homeowners’ insurance market in Virginia," he said. "Companies are writing insurance; we have no information that it’s not available. The price may be going up, but we haven’t seen a significant problem."

Companies don’t have to report to the bureau when they decide not to write policies, said Lyle, so the state gets only anecdotal evidence about such matters. However, he said he has not gotten a lot of calls from people saying their insurance is being cancelled. The problem with Farm Bureau, he said, is just that the company had written too much property insurance and needed to mitigate its risk.

While a lot of people will be affected by Farm Bureau’s decision and waterfront coverage is neither easy nor cheap, said Lyle, people who are willing to shop around should be able to find insurance. They may not be able to get coverage from larger, well-known companies, he said, but "there are a lot of players," and the fact that a company is smaller doesn’t mean it can’t provide the same coverage and the same ability to handle damages.

"If you can’t get the top five," he said, "there are another 10 companies waiting to write policies … Everybody can’t be the biggest."

Lyle suggested that anyone who needs to purchase homeowners’ insurance check the State Corporation Commission’s website for a list of the top 50 companies by size that are licensed to do business in Virginia. He also suggested that if they shop around elsewhere, they make sure any companies whose names they don’t recognize are licensed to do business in Virginia.

Properties that can’t be covered through traditional insurance policies because they’re "high dollar" or too close to the water can always be covered through companies in the surplus lines market such as Lloyds of London, said Lyle, while properties that have too little value for most insurance companies to be interested in can be covered through the Virginia Property Insurance Association.

Last year saw a lot of losses, said Lyle, and the premiums being charged this year reflect that. But, he said, "no company is happy about having to terminate policies and lose good customers."

The web address for the Virginia Bureau of Insurance is http://www.scc.virginia.gov/boi/.