Maryland regulators cleared Allstate Corp. yesterday of wrongdoing in its decision to stop writing new homeowner policies in certain coastal areas, a move that had been criticized by consumer advocates and state legislators.
The regulatory decision comes as the General Assembly takes up legislation intended to protect consumers and ensure the affordability and availability of homeowner's insurance in coastal areas that are most vulnerable to hurricanes.
Insurance Commissioner Ralph S. Tyler is working with legislators to craft the bill based on a task force report that's expected to be released in coming days.
Tyler acknowledged that his office's decision in the Allstate case, which was triggered by a complaint from the consumer advocate People's Insurance Counsel, might be "disappointing to some." But, he said, it was based on "the law as it is written, not as we might wish it to be."
He added that while homeowner policies for coastal areas are available, they have gotten more expensive.
"The market has gotten tighter," Tyler said. "The legal and regulatory problem we're concerned about is what can you do to protect consumers without discouraging insurance companies from writing in the area all together."
Some insurance companies have moved to limit their liability along the Eastern Seaboard and in some cases near the Chesapeake Bay, noting warnings by scientists that a warmer Atlantic Ocean will lead to an increase in the number of strong hurricanes hitting those areas.
Allstate, one of the largest insurers in Maryland, said it would no longer offer new property insurance in all or part of 11 counties in the state. Existing customers weren't affected by the change.
Retreat after storms
Insurance companies are retreating from coasts after a series of devastating storms in recent years, including Hurricane Katrina, which swamped Louisiana and Mississippi. Risk modelers, who forecast natural disasters for the insurance industry, have updated their methods to take into account higher sea temperatures.
Allstate, which implemented its policy in June, submitted modeling data in the regulatory case showing that several hurricanes making landfall in Worcester County, Virginia and Delaware could cause hundreds of millions of dollars in damage in Maryland.
