Some 3,305 coastal residents in New York whose homeowners insurance policies had not been renewed by Liberty Mutual partly because they did not have other policies with the company – such as life or automobile coverage – will be offered the opportunity to get new homeowners coverage with Liberty Mutual, according to Insurance Superintendent Eric Dinallo.
The agreement with Liberty Mutual follows Dinallo’s August 28 directive banning the practice, called “tying.”
Whereas Allstate Insurance originally resisted the anti-tying directive, Liberty Mutual cooperated from the start, according to officials.
“Liberty Mutual is to be commended for acting as a good corporate citizen by promptly complying with the department’s directive and diligently working to do right by its affected customers,” Dinallo said. “This is an example of how regulation works best, with the industry and regulators working together to reach the best possible outcome for consumers.”
After receiving complaints from some coastal homeowners that their homeowners insurance policies were not being renewed, in part because they did not have an automobile or life insurance policy with the company or an affiliate as of a specific date, Dinallo ruled in August that it was illegal for insurers to base a decision not to renew homeowners policies on the existence of other business with the company.
Liberty Mutual and Allstate were identified as engaging in the practice. Both companies were directed to cease immediately and offer renewal to any homeowner who had received a non-renewal notice that had not yet taken effect.
“Liberty Mutual immediately rescinded any non-renewals that had not gone into effect, and since then has worked cooperatively with the Insurance Department to fashion a suitable remedy for those who had to find other insurance coverage,” Dinallo said.
Now Liberty Mutual will addresses those whose policies had already terminated.
Beginning November 5, Liberty Mutual will send letters to these policyholders offering them the right to an immediate quote and renewal of their policies for a period of at least three years. Liberty Mutual plans to contact all 3,305 affected policyholders over a 10-week period.
After Dinallo’s department issued the circular letter calling for a halt to the tying practice, the department issued a citation to Allstate citing what the department said was the company’s refusal to comply with the letter. The department called for a September hearing and threatened fines and disciplinary action against Allstate.
According to the department, Allstate has since agreed to fully comply with the circular letter, so the department cancelled the public hearing.
Allstate had said it believes it is within its rights to non-renew based in part on whether the insureds also have auto or life policies with the company. The non-renewal tactic is part of its strategy to reduce its coastal exposure. The insurer maintains that its practices comply with state insurance law.
Source: New York State Insurance Department
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