Insurers also say that development and higher property values along coasts have increased their exposure to disaster losses. Allstate and other companies say they limit their liability in catastrophe-prone areas to remain financially healthy enough to pay the claims of current customers.
"It has always been our intent to manage catastrophe exposure in a way that avoids disrupting the Maryland insurance market while maintaining our ability to protect our policyholders from a position of financial strength," Allstate spokeswoman Debbie Pickford said in a statement.
The People's Insurance Counsel, a division of the attorney general's office, argued that Allstate's move was arbitrary and unreasonable, and that the company failed to show that the rates it charged weren't enough to cover projected losses.
Ilene J. Nathan, an assistant attorney general, said the counsel's office is reviewing whether to appeal the insurance regulator's decision through the courts.
The Maryland Insurance Administration, which heard the case, found that Allstate's move was not discriminatory and had a reasonable business and economic purpose.
State lawmakers also expressed concern last year over Allstate's move, which was announced in late 2006. They held hearings on the issue but eventually voted down a bill that would have forced companies to write policies in coastal areas. Instead, the legislature approved a task force to study the issue.
Legislative proposals
This year, legislators are considering proposals to address the legal standard governing when insurers can change their underwriting policies and whether insurers should be required to get prior approval for any changes.
In addition, lawmakers said, a bill could address deductibles related to coastal coverage and how homeowner efforts to protect their property and smart planning by localities should be reflected in policies.
"We just found it to be very arbitrary that you can come in and cherry-pick where you did not want to do business," said Del. James N. Mathias Jr., an Eastern Shore Democrat and former Ocean City mayor.
laura.smitherman@baltsun.com
