Maryland mulls how to keep property insurers on coast

Alarmed that homeowners on Maryland’s coasts may one day be cut off from home insurance, state lawmakers are mulling new rules prohibiting insurers from pulling out of areas they deem risky.

But insurers met with lawmakers recently to tell them there’s no need for alarm and that they shouldn’t tinker with the market.

Senators were briefed on insurance availability in the wake of the December decision by the state’s second-largest home insurer — Allstate Corp.’s Allstate Insurance Co. — to stop writing new home policies in many coastal areas in Maryland. Citing projections of more hurricanes, Allstate added Maryland to the states where coastal home policies may no longer be written. Delaware and parts of Virginia also were included.

In Maryland, a House bill under consideration would require home insurers to cover the whole state or none of it.

Allstate’s decision in Maryland has coastal residents fearful they won’t be able to get insurance, said Republican Sen. E.J. Pipkin, whose district includes Kent Island and miles of Chesapeake Bay coastline. “It looks like they’re picking and choosing where they want to do business,” Pipkin said.

Several insurers told the senators that Pipkin was correct but that insurers should not be forced to take more risk than they can afford. Insurers cited the possibility of more storms aggravated by more development on the coast.

“The population’s moving to the coast,” said Jeff Williams, counsel for Allstate, which covers about 300,000 homes in Maryland. “People want to live near the water. People want to retire near the water.”

But Williams added, “We cannot ignore what the forecasters … are telling us. We are looking forward to a lot more hurricanes and a lot bigger hurricanes.”

Allstate’s decision affects all or part of 11 Maryland counties. The company estimates it will avoid writing 1,600 new policies this year.

The state’s largest insurer, State Farm Mutual Insurance Co., testified that it was also going to stop writing some policies. Lynn Dickerson, State Farm’s vice president of operations, said the company decided last year to expand its do-not-insure area in Worcester County. Already the company does not insure in Ocean City.

“At some point in time, a hurricane will make a direct hit in the state of Maryland,” Dickerson said. Dickerson said there’s no shortage of insurers that will keep writing closer to the coast. “The market is working very well,” he said.

Steven Orr, the state’s insurance commissioner, told lawmakers there’s nothing to worry about. He blamed fears about the insurance availability on a media frenzy. “Maryland is in great shape compared to many of our neighbors,” Orr said.

Orr urged lawmakers not to force insurers to cover certain areas, saying it’s an unneeded check. “This situation is overblown,” Orr said. “Maryland is fine.”

Sen. Catherine Pugh, D-Baltimore City, worried if coastal insurance would return. “Will you just be forced to write new policies in the center of the country?” she asked Williams.

The Allstate lawyer answered, “I certainly hope it doesn’t come to that. But we are reducing our exposure on the coasts.”

Topics Carriers Legislation Property Hurricane Homeowners Maryland