Allstate Will Seek Higher Rates for La. Homeowners

Allstate Insurance companies will seek higher rates, possibly average increases totaling 55 percent or more, for the “next several years” starting in 2007 and will increase the deductible on hurricane policies by 5 percent on homeowners qualified for wind and hail coverage, company officials said.

April Eaton, Allstate’s senior Southern regional corporate relations manager, said Friday the company also will take steps to restrict or not renew wind and hail coverage to about 18,000 to 19,000 Louisiana residents, mainly in coastal areas. Eaton said the insurer will not make wholesale cancellations in wind and hail coverage in hurricane-prone areas.

Eaton said she did not know how much of a rate increase the company will be seeking in the coming years to offset claims paid for damages from Hurricanes Katrina and Rita. But a letter from Allstate regional general counsel Lorrie Brouse to Insurance Commissioner Jim Donelon said the company’s exposure “over the next several years will necessitate rate increases totaling approximately 55 percent,” possibly higher.

Donelon said that Allstate recently received an average 12 percent rate increase and he does not see a 55 percent increase as justified now. “That remains to be seen,” he said. “It sounds like they are testing the waters.”

Eaton said the company is embarking on a six-point plan to reduce its exposure to disasters in the state, a program she called “catastrophe exposure management actions.” She and Donelon said all of the steps are in keeping with state consumer protection laws.

Allstate has about 20 percent of the homeowners market in the state and is the second-largest writer of homeowners’ insurance in the state with 210,000 to 220,000 customers.

Donelon said Allstate threatened in July to drop the wind and hail portion of 30,000 homeowners policies in 18 parishes in south Louisiana starting Jan. 1. At that time, Donelon told Allstate officials that wholesale non-renewals would violate state laws that bar an insurance company from dropping a homeowner if the company is solvent and the customer is in good standing, has been insured by the same company for at least three years and has filed no more than two non-act-of-God claims.

Donelon said he would go to court to prevent Allstate _ and other companies _ from violating the consumer protection law. Donelon and Gov. Kathleen Blanco met with Allstate President Thomas Wilson in August and each pledged to work out a solution.

Eaton said Allstate has not determined how much of a rate increase it will seek next year but told Donelon one will be sought each year for the next several years.

“It is their right under the law,” Donelon said of the program outlined by Allstate. “I wish they weren’t doing it.”

Besides proposing higher rates, Allstate also said it will:

— Not renew renters, homeowners and condominium insurance on property that shows “a substantial change in risk,” based on inspection by the company. That will take place starting in the first quarter of 2007, she said.

— Apply a 5 percent hurricane deductible to all properties with wind/hail coverage in the state but will adjust premiums charged. The deductible will go into effect in the second quarter of 2007.

— The company will no longer renew wind and hail coverage on homeowners, renters and condominium policies that have been in effect for less than three years in 18 parishes starting in the second quarter of 2007. The parishes affected include: Ascension, Assumption, Cameron, Iberia, Jefferson, Lafayette, Lafourche, Orleans, Plaquemines, St. Bernard, St. Charles, St. James, St. John the Baptist, St. Martin, St. Mary, St. Tammany, Terrebonne and Vermilion. Eaton said that would affect about 18,000 to 19,000 policyholders.

— Starting Nov. 26, Allstate homeowners in the 18 parishes — plus nine more in south Louisiana — will not be able to get wind and hail coverage on “replacement policies,” those that are written on new homes if the customer moves anywhere within the 27 parishes. The additional nine parishes include Acadia, Calcasieu, East Baton Rouge, Iberville, Jefferson Davis, Livingston, Tangipahoa, Washington and West Baton Rouge.

— As of March 2, Allstate will not renew landlord insurance that now provides coverage to individuals who own single- or multifamily structures that are rented to others.