Clinton Sees Victory In Allstate Decision
Over the past several years, Allstate Insurance has been dropping policyholders who have only homeowners insurance with the company, in an attempt to minimize its costs should a hurricane hit the peninsula.
While a federal program provides flood insurance for locals, traditional homeowners policies flow from private companies such as Allstate.
The law allows insurance companies to drop a specific percentage of its liability each year without showing cause, such as failure to pay premiums or excessive claims.
Now, under pressure from a ruling by the New York State Commissioner of Insurance, Allstate has modified its program for dropping policyholders and perhaps, will have to provide new insurance for some policyholders who were dropped previously.
Senator Hillary Clinton, a candidate for the presidency, sees that as a victory.
"This is a victory for the Allstate policyholders in Westchester, Long Island and New York City who were all facing the threat of having their insurance canceled," Clinton said in a prepared statement. "I am glad to see that Allstate has taken my concerns, and the concerns of their customers in New York seriously by allowing them the opportunity to renew their contracts.
"Many cities throughout downstate New York experienced severe flooding this year, and homeowners who played by the rules and took out disaster insurance should not be penalized or left without future coverage. While it has taken several months, I am happy to see that Allstate is stepping up to do the right thing for the policyholders of New York State. It is clear that a longterm solution to the problem of the availability and cost of catastrophe insurance is necessary. I have introduced legislation to provide that long term solution, and I will continue to work with my colleagues to ensure that we continue pursuing workable resolutions to this problem."
The decision is a victory for coastal residents who were improperly dropped by Allstate, in part, because they did not choose to carry the company's car or life insurance policies; the ruling gives such policyholders a chance to renew their contracts.
The announcement came from state Insurance Superintendent Eric Dinallo, and follows his ruling in August that the practice of linking customers' eligibility for homeowners insurance to their choice of carrier on other policies is illegal.
In November, Senators Clinton and Bill Nelson introduced the "Homeowners Defense Act of 2007," an innovative proposal to pool and diversify catastrophe risk to make disaster insurance for hurricanes, floods, fires and other natural disasters more available and affordable for American homeowners.
Earlier this year, as policyholders were being denied, Senator Clinton reiterated her concerns to Allstate's CEO, calling for a detailed explanation for the company's actions, and urging the company to resume writing homeowners insurance policies for residents in Westchester, Long Island, and New York City.
Allstate's action was part of efforts begun by the company in 2006 to lower its hurricane risks along the country's eastern coast. However, this practice has been criticized as other insurers who provide coverage in the same areas and who are exposed to the same risks, have not taken similarly drastic measures.
This action by Allstate would have also left their policyholders in a bind, as they would have been forced to search for new insurance carriers and may have faced the possibility of higher premiums.