Homeowners insurance rates soar Allstate increases top 40% in Howard, parts of Baltimore

'We have to stay viable'

Company points to rise in claims after harsh winters

September 08, 1996|By Dana Hedgpeth | Dana Hedgpeth,Maryland Insurance Administration Pub Date: 9/08/96 SUN STAFF Sun staff writer Erin Texeira contributed to this article.

An estimated 125,000 to 150,000 Maryland homeowners are being hit with unusually large increases in their home-insurance premiums by Allstate Insurance Co. -- led by a 44 percent average rate rise in Howard County and a 40.5 percent rise in parts of Baltimore.

The Allstate premium increases -- which went into effect in July for new policies and will go into effect Sept. 17 for renewals -- average about 17 percent statewide but vary widely by jurisdiction and even by areas within Baltimore, according to Allstate and state insurance officials.

Other areas of the state facing large Allstate home-insurance premium increases include Dorchester County (about 32 percent), Cecil County (almost 30 percent), Carroll County (almost 29 percent) and Allegany, Garrett and Washington counties (about 22 percent).

In Baltimore, the Govans, Hampden, Roland Park and Waverly areas face premium increases of 40.5 percent. But the rate increases in the rest of the city and in Baltimore County are about the statewide average.

Allstate is Maryland's second-largest home insurer. Officials at other large homeowner insurance companies -- such as State Farm, the leader, and third-place Nationwide -- say they might follow suit by raising rates by December, but not as much as Allstate has.

Bob Sohovich, a Nationwide spokesman in Ohio, said his company might raise its home-insurance rates in Maryland by an average of about 5 percent.

Allstate officials said that company's rate increases result from increased damage claims after the recent winters' ice and snowstorms -- and from the company's not having raised rates enough this decade.

The company is raising its home-insurance rates by similar amounts in some other parts of the country, particularly Florida, where hurricanes have caused damage.

Experts on the insurance industry say rate increases of this magnitude are uncommon and reflect poorly on Allstate's management.

'Very surprising'

"A rate increase of this much -- 30 and 40 percent -- for areas is very much out of the ordinary and very surprising to see in areas outside of Florida or seaboards," said Bob Hunter, insurance director of the Consumer Federation of America in Washington.

Kathleen F. O'Reilly, an attorney with the consumer group, said Allstate is "acting like this is coming as a complete surprise, but who should know better than them the risks and values of the homes they insure? This whole thing smells like a 12-day-old fish."

Hunter added, "It's big rate increases like these that get the consumers to start shopping around."

As Allstate sends out its first hefty bills for home-insurance renewals this month, some of its policyholders might be doing just that.

Consumer complaints

The Maryland Insurance Administration said it has received about 10 calls from Allstate policyholders. State officials say they expect many more.

"They have to pay more money, and they're quite upset, and they want to voice their concerns," said John Quinn, who handles the agency's consumer complaints. "I'm sure we'll be getting more than a year's worth of complaints from people saying, 'Hey, what happened with my bill, I'm paying way too much. This is outrageous' -- just from this rate hike.

"It's just natural that people complain when they're charged more."

Michael Refolo, a Columbia homeowner who received a bill from Allstate this month with a 41 percent premium increase, said he is considering shopping for a better rate.

His annual home-insurance premium on his $153,000 home in Columbia's Owen Brown village rose from $258 last year to $365 this year.

"That's a huge increase, and I may be switching quite soon," he said. "It's so shocking to see this much of an increase from a company because it so far exceeds the rate of inflation. Usually, you expect an increase from the assessed value of your home or a few percentage points here and there from inflation, but not this."

Allstate officials declined to say how many homes the company insures in Maryland, but based on its state market share of about 12 percent, experts estimate that it has 125,000 to 150,000 home-insurance policyholders in the state.

The company's last statewide home-insurance premium increase, which came last year, averaged about 6 percent, and rates decreased in some areas of Maryland, including Howard County.

In June, the company filed notice of its 17 percent statewide rate increase with the state insurance agency. The state approved the rate increase Aug. 27, although Allstate legally was allowed to put it into effect in July for new policies.

In its filing, Allstate said it had taken in more than $300 million in statewide home-insurance premiums during 1991 through 1995 but lost more than $272 million.

Howard losses high

In Howard County -- where experts estimate the company has 5,000 to 7,500 home-insurance policyholders -- the company's losses were about 20 percent higher than its statewide average, the Allstate filing said. The company did not detail in the filing how much it lost in Howard.

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