Allstate told to reinstate 4700+ New Orleans policies

Insurer must reinstate policies in New Orleans

Bloomberg News
Wednesday, March 7, 2007

NEW YORK: Allstate, the second- largest U.S. home and auto insurer, must reinstate as many as 4,772 policies in the New Orleans hurricane area after an investigation by Louisiana's insurance regulator found that some coverage was canceled improperly.

Allstate told Insurance Commissioner Jim Donelon it had dropped the policies because they covered homes found to be abandoned, Donelon said Tuesday at a news conference broadcast on his Web site.

In examining a sampling of addresses, he found that some homes were being repaired instead.

"At best, it was a very ill-conceived and spottily implemented inspection program," Donelon said. "At worst, they wanted off of the coverage."

Allstate said it had inspected each property and given customers a chance to prove they were repairing their homes before dropping the policies. Construction at some homes may have begun only after the Allstate inspection, said the company spokeswoman, Kate Hollcraft.

Donelon ordered the Northbrook, Illinois-based company to restore all policies that were canceled without the homeowner's consent. Allstate is reviewing the order, Hollcraft said.

Allstate has been retreating from coastal areas to reduce its risks after Hurricane Katrina and other Gulf Coast storms pushed its 2005 catastrophic costs to $5.67 billion. The company stopped selling new policies in parts of Louisiana and other states last year.

State Farm reconsidering

State Farm Mutual Automobile Insurance will reconsider as many as 1,200 claims from Mississippi policyholders whose homes were reduced to concrete slabs by Hurricane Katrina, Bloomberg News reported.

The state's largest home insurer will have a new claim adjuster review each of the so-called "slab" claims, a company spokesman, Fraser Engerman, said Tuesday. Insurance Commissioner George Dale estimated that at least 800 cases would be re-examined.

Katrina's devastation in 2005 left room for widespread disputes because so little of some homes remained. Wind-related damage is covered, while wreckage from water is not.

"What we're telling them to do is to pay the claims based on a new set of eyes looking at the loss," Dale said in an interview. In most of State Farm's slab cases, policyholders have gotten "little or nothing," he said.