Allstate Insurance Co. announced yesterday that it would stop selling homeowner insurance to most new customers in Florida and that it was studying cutbacks in coverage in coastal sections of New York.
The move is a further sign that the insurance industry, after suffering more than $16 billion in losses from Hurricane Andrew, is cutting back on property coverage along America's most storm-prone coasts. Previously, cutbacks were announced by State Farm and other insurers in Florida and by Travelers Corp. in the New York region.
Travelers cut its New York-area coverage after storms last month that brought hundreds of millions of dollars of damage to coastal regions of Long Island, Connecticut, New York City and Westchester County.
Allstate said it would stop writing all new homeowners' policies in Florida except for Allstate automobile customers who want coverage for their homes. Allstate, a unit of Sears, Roebuck & Co., is the second-largest property insurer in Florida, after State Farm.
Allstate had losses of $2.5 billion from Hurricane Andrew and after-tax losses of $1.65 billion. It said it would continue to insure its current customers in Florida.
"At the moment it is Florida, but you will see steps to reduce exposure by insurers around the country," said John H. Snyder, a senior vice president of A. M. Best Co., an insurance rating firm in Oldwick, N. J. "In the next year you will see availability problems begin to build, particularly in coastal regions, particularly in the South. It is going to take a lot more shopping around to find more coverage."