Allstate to curb exposure in Gulf Coast

NEW YORK (CNN/Money) - Allstate, the largest publicly traded homeowners and auto insurer in the U.S., said it plans to scale back its exposure to the Gulf Coast homeowner's market following the devastation of hurricanes Katrina and Rita this summer.

Speaking at the company's third quarter earnings conference call with analysts earlier Thursday, Chief Executive Edward Liddy said Allstate would continue to provide assistance to those affected by the deadly hurricanes but would curb its exposure, a company spokeswoman confirmed. Liddy didn't provide an estimate of how much the company would scale back in the region.

The news came as Allstate, which had not previously disclosed its losses from hurricanes, said hurricanes Katrina and Rita triggered over $3 billion of catastrophe payouts in the quarter, up almost $2 billion from the same quarter last year. The company slashed its full-year operating profit target to between $2.35 and $2.50 per share from an earlier range of $6 to $6.40 a share as a result of the hurricanes.

They are going to cut down the number of properties they insure. I expect they willdo so especially in the areas where they have idiot politicians wanting them to cover things like flood that they never collected premiums for and are specifically excluded in the policies they sold. Policies written by the states in the first place.

I heard Trent Lott on the radio the other day saying that the commercial insurers should pay for claims that are not covered. That's just stupid. By the way, Lott and others in Congress allowed FEMA/NFIP to sell flood insurance in coastal areas where they never really should have.

You see, down here in Mississippi many homes were destroyed that had never previously flooded, not even during Hurricane Camille (the yardstick by which flood zones and building codes were measured).

The State, Fed, and Insurance companies told home owners that lived in these "official" non-flood zone areas, that it was unnecessary for them to purchase Federal Flood Insurance. Since neither mortgage companies, banks, or lienholders required Flood Insurance to be purchased for these homes in non-flood zone areas; homeowners that were assured that their Hurricane Insurance within their Homeowners Policy would cover everything required, did not purchase Federal Flood Insurance. Why should they? They were assured that they did not need it.

It is these Insured that are seeking help in having their Insurance Companies pay-off, on what they had been assured was the only policy that they would need.

Many lucky homeowners have video tape of roofs flying off, walls collasping after catastrophic window failure etc, before the flood waters wiped out their homes. In these cases, they have sucessfully received full payment.

Those that lived in flood zones and previously flooded areas that did not purchase Federal Flood Insurance, have homeowners policies that explicitly state that flood damage is not covered. This was an assumed risk that they gambled on, and lost.

We lost two homes in Katrina. One was in a flood zone, and one was not. Both had Flood Insurance in effect, and in both cases Insurance Companies have agreed to pay... but we have yet to see any $$$.

LLS

1. Those who live in SFHAs (Special Flood Hazard Areas) - which are the flood zones designated as such by FEMA - are required by law to have NFIP flood insurance if the property secures any type of mortgage loan, and as long as the community is a "participating" community - which most are.

2. Those who do not live in SFHAs can buy what's called a Preferred Risk flood policy through the NFIP. It's less expensive because the risk is less. Anyone who has even the slightest bit of chance for flood should purchase this. It's quite affordable.

Homeowners are responsible for fully reading their insurance policies to know what they cover and don't cover. And homeowners are fully responsible for making their own decisions on what insurance they do and do not need, since insurance "needs" are based solely on the homeowner's decision of how much risk they are willing to take on.

I'm very glad to hear both of your properties were properly covered. Too many took the chance and now regret it.

I used to live about 1 mile from the Grand Casino in Gulfport. I was five houses up from the beach. I kept FFI ineffect on that property for the 18 years that I lived there. Not once, even through many hurricanes, did I ever have to use it. I experienced some minor wind damage, but I never had any rising water damage.

The house did not get any water in it during Camille. I sold this particular house in 1996 due to hurricane concerns (and Casino noise, rising crime etc), and it was completely destroyed by Katrina. A few walls are standing, but the only thing not damaged was a substantial fireplace that I had put in.

Another home was 10ft above the level of flood waters that Camille had brought in. It was 30ft above sea level. It had 5 feet of water in it. We have always kept FFI in effect on it also.

The other home was in a major flood zone, and was destroyed as we expected. It had 4ft of water during Cammille, but Katrina brought in 14ft of water.

Many people flooded that were not in any area that had a flood rating of any kind. I understand that there will be a major re-write of the flood plane chart, and the building code heights etc. I agree that if there is even a remote chance that you can flood, it is prudent to have such coverage. If you are told by the government and your insurance company that you are in an area that does not need the coverage, and then you need the coverage, government and industry should step up with some sort of program to help cover those with losses that acted in good faith.

Without some type of plan, thousands of homes (and the tax payers/employees/business owners) living within them will not be able to rebuild. Many will leave the area for good. Bay St. Louis, Waveland, and Pass Christian, teeter on the brink of non-existence due to no people, no businesses, and no tax base.

I don't know the answer, but I think maybe the plan that Trent and Gene are talking about, where a family can buy into the flood pool say for 10 years of back premiums (and signing a contract to continue coverage as long as they own the property) may be one workable solution.

I wish that I had upped my policies last year when I was thinking about it. At least we had replacement cost on contents.

Thank you for the reply. I hope that you faired well?

LLS

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.