By
Frank Eltman
February 6, 2006
New York State's largest provider of homeowners insurance
should reconsider its decision to stop writing new policies
in the metropolitan area over concerns about hurricane
damage, according to Sen. Charles Schumer.
"The chances of a Katrina-type hurricane hitting our area
is one in every 500 years,'' Schumer said. "Allstate has to
have a greater sense of responsibility.''
The Northbrook, Ill.-based company announced that as of
Jan. 1, it would no longer sell new homeowners insurance in
New York City, Long Island and Westchester County. The
company made a similar decision to stop writing policies in
Florida following the 2004 hurricane season, said Brian
Pozzi, Allstate's regional counsel based in Hauppauge.
The decision does not affect current Allstate customers.
Although the New York area was the first outside of the
Gulf region to be affected by Allstate's decision, the
company is studying whether to stop writing new policies in
other parts of the country, particularly vulnerable
shorefront areas, Pozzi said.
"We have learned from the 2004 and 2005 hurricane seasons
that hurricanes are becoming more frequent and more
severe,'' Pozzi said. "There's widespread agreement among
scientists that we've entered into a cycle of more active
hurricanes.''
Allstate is currently the largest provider of homeowner
insurance policies in downstate New York, with 26 percent of
the market, or about 450,000 customers.
"We feel we have to manage our exposure here,'' Pozzi
said. "All we have done is stop writing new business.''
Schumer contends that Allstate's decision will result in
higher premiums for all homeowners because of reduced
competition.
He called the company's hurricane fears a "bogus scare
tactic.''
Earlier this week, Allstate announced its earnings had
dropped 9 percent in the fourth-quarter, citing payouts from
Hurricane Wilma in south Florida last October. Net income at
Allstate totaled $1.04 billion, or $1.59 a share, down from
$1.14 billion, or $1.63 a share, a year earlier.
Losses from Hurricanes Katrina and Rita contributed to a
third-quarter loss of $1.55 billion, the largest quarterly
loss for Allstate as a publicly traded company.
A major hurricane barrels into New York City about once
every 90 years; the last was the deadly 1938 "Long Island
Express.''
"If it happened before, it will happen again,'' hurricane
expert Nicholas Coch, a Queens College professor of coastal
geology told The Associated Press in an interview last fall.
"And if it hasn't happened in a long time, it's going to
happen soon.''
Last week, Howard Mills, the state superintendent of
insurance, announced his department would conduct a hearing
on Allstate's decision on Feb. 27 at the department's New
York City office. Mills, a former state assemblyman, became
the head of the insurance department after losing a bid to
unseat Schumer in the 2004 election.
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