Insurer coastal pullout assailed

Key delegate drafts bill requiring underwriters to cover entire state

February 07, 2007|By Laura Smitherman | Laura Smitherman,Sun reporter

Allstate Corp. and other insurers could be forced to write homeowner policies throughout Maryland, including coastal areas where some companies have pulled out, under legislation being drafted in the General Assembly.

Del. David D. Rudolph, vice chairman of the House Economic Matters Committee, said yesterday that he plans to introduce the bill but that specific language has yet to be worked out.

Rudolph said he is responding in part to Allstate's announcement in December that it would stop writing new homeowner policies in the state's coastal areas. The company said it would continue to renew existing customer policies.

Allstate pointed to warnings by scientists that higher sea temperatures in the Atlantic Ocean may lead to more hurricanes making landfall in the Northeast.

The company also changed its underwriting policies in Delaware, Virginia and other states.

"When statewide operators make decisions based on predictions of the future and not conditions today, we want to make sure there's a process followed to protect the citizens of Maryland," said Rudolph, a Cecil County Democrat who heads the property and casualty insurance subcommittee.

Rudolph said lawmakers need to explore how such legislation would affect small, local insurers. Del. Dereck E. Davis, the full committee chairman and a Prince George's County Democrat, said lawmakers also must consider the legislation's impact on the entire industry.

"We need to be mindful in our efforts to protect residents as much as possible that we don't do anything that would drive away carriers or have an adverse impact on the availability of carriers," Davis said.

In addition to Allstate, State Farm Insurance Cos. has stopped writing new policies on properties within given distances of the Atlantic Ocean and Chesapeake Bay. Nationwide Mutual Insurance Co. also has decided to limit new business in coastal areas in the state.

"We have to always assess exposure in disaster-prone areas to make sure that we can take care of our current customers," said Maria Jackson, a spokeswoman for State Farm.

Jackson and Allstate spokeswoman Debbie Pickford declined to comment on Rudolph's proposal because they have not seen the legislative language.

Maryland Insurance Commissioner R. Steven Orr, in a letter to legislative leaders last month, said that the state's property and casualty insurance market "remains healthy and competitive."

Orr said his office conducted a telephone survey of top brokers and agents on the Eastern Shore recently. It found that a number of carriers, including American International Group Inc. and St. Paul Travelers Cos., are still seeking new business.

Meanwhile, Orr said Lloyd's of London has lowered rates to attract new business across the Shore.

Orr defended insurers that have restricted their business in coastal areas.

"In particular, those carriers that had competed aggressively for market share in many states suddenly found themselves looking at catastrophic loss models that had the potential to threaten their solvency," Orr said.

laura.smitherman@baltsun.com

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