Spoiled Homeowners
Allstate Corp. in Maryland is acting responsibly, and Maryland consumers just don't like that:
Insurance companies are retreating from coasts after a series of devastating storms in recent years, including Hurricane Katrina, which swamped Louisiana and Mississippi. Risk modelers, who forecast natural disasters for the insurance industry, have updated their methods to take into account higher sea temperatures.
Allstate, which implemented its policy in June, submitted modeling data in the regulatory case showing that several hurricanes making landfall in Worcester County, Virginia and Delaware could cause hundreds of millions of dollars in damage in Maryland.
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 spokesman Debbie Pickford said in a statement.
The Katrina debacle showcased a situation where flood insurance was subsidized and not mandatory. yet smaller insurers took an awful beating. Raising rates to reflect the actual risk of living in marginal areas and eliminating the cozy relationship between state agencies and insurers, to make insurance mandatory, is a sane idea.
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