Allstate Insurance Co., continuing its reappraisal of its hurricane loss exposure along the East Coast, has decided to stop writing new property insurance policies in all areas of Connecticut, New Jersey and Delaware.
The stoppage applies to the writing of new homeowners, condominium, mobile home and landlord policies. It does not affect policies for renters. It also does not affect renewal business on homeowners or any of these lines.
The underwriting change goes into effect in January in Delaware and February in the other two states.
Company spokespeople said the move to curtail business reflects the need for the insurer to reduce its exposure in areas where hurricane risk models show major storms are most likely to hit and cause damage.
“The company wants to be responsible and be able to stay in the marketplace, ” noted Donna Picciocchi, media contact for Allstate in Connecticut.
The company said that its independent contractor salespeople in the three states would have the option of referring new clients to independent insurance agencies that can offer them policies from other companies.
“Our goal is to find solutions that support a prudent presence for consumers in potentially catastrophe-prone markets. The expanded market solution allows Allstate agents to help new customers find home insurance coverage with third party carriers not affiliated with Allstate and increases capacity in the marketplace. Given trends over the past several years of more powerful and frequent hurricanes, we believe we are taking responsible actions to ensure we can continue to help protect the assets of our millions of customers,” commented Debbie Pickford, Capital Region senior field corporate relations manager for Allstate.
Allstate is the largest homeowners writer in Connecticut, with 122,000 policyholders. According to Sheila Breeding, media contact for Allstate New Jersey, the insurer currently writes about 230,000 homes in that state, which she noted has the nation’s highest population density. The company has approximately 13,700 homeowners policyholders in Delaware.
Picciocchi said the Connecticut cutback was not in response to this week’s decision by Insurance Commissioner Susan Cogswell to change her policy and restrict insurers’ ability to require loss mitigation steps, including storm shutters, on coastal policies. She said the Allstate decision has been in the planning for two years.
According to Cogswell, Allstate representatives met with officials
from her department two weeks ago to notify them of their intent
to stop writing new business in the state.
“We regret that they have chosen to reallocate their capital elsewhere in the country but we are pleased that other companies doing business in the state will provide needed coverage to homeowners. The department will work with those carriers to ensure a smooth transition,” Cogswell vowed in a statement.
While it may not have come about as a result of Connecticut’s new rules on coastal underwriting, Allstate’s decision could exacerbate insurance availability problems in that state coming on the heels of the imposition of those new rules. Insurer trade groups have criticized the new guidelines as overly-restrictive.
“I hope we are not developing our own perfect storm scenario here. Companies are already struggling to figure out how to operate under the new coastal rules and now Allstate makes this announcement,” said Warren Ruppar, executive vice president for the Independent Insurance Agents of Conn., expressing concern whether the remaining competing insurers will be able to fill the gap.
These new moves continue Allstate’s strategy of reducing its catastrophic exposure. This past year the insurer stopped selling new home policies in some coastal parts of New York including New York City, Long Island and Westchester County. It has taken steps to reduce its exposure in the Gulf States and it also began dropping its sales of earthquake coverage nationwide
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