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Eric R. Dinallo   Superintendent of Insurance  25 Beaver Street  New York, N.Y. 10004

ISSUED 12/17/2007 FOR IMMEDIATE RELEASE

 

ALLSTATE TO OFFER NEW POLICIES TO WRONGLY DROPPED COASTAL HOMEOWNERS

Allstate has agreed that coastal residents whose homeowners insurance policies had not been renewed by the company and various of its subsidiaries partly because they did not have other policies with the company – such as life or automobile coverage – will be offered the opportunity to get new homeowners coverage with the company, Insurance Superintendent Eric Dinallo announced today.

This follows Dinallo’s August 28 directive banning the practice, called “tying,” and the Insurance Department’s August 31 citation of the company for violations of the Insurance Law. The agreement is set forth in a stipulation signed today resolving that citation.

“Allstate customers improperly denied the chance to renew their policies now have the right to choose if they want to stay with the company,” Dinallo said. “Consumer protection is a basic principle guiding the Department’s actions, and we will be zealous in safeguarding consumers’ rights in any transaction with an insurance company.”

Dinallo warned, however, that this announcement does not mean Allstate will stop implementing its plan to reduce its concentration of customers in coastal areas, as they are permitted to do so under law. Consistent with its previous announcements, Allstate will continue to reduce its concentration of homeowners insurance policies in coastal areas nationwide, including in New York, by not offering to renew the policies of some customers.

“Insurance companies must be able to pay their claims when disaster strikes,” Dinallo said. “They have the right and the obligation to consumers as well as shareholders to act prudently so their solvency is not threatened. But their actions must be in accordance with the law.”

In August, Dinallo deemed it illegal for Allstate and other insurers to base a decision not to renew homeowners policies on the existence of other business with the company. This came after the Insurance Department received complaints from some coastal homeowners that their homeowners insurance policies were not being renewed, in part because they did not have an automobile or life insurance policy with the company or an affiliate as of a specific date.

Allstate was identified as engaging in the practice. Companies engaging in the practice were directed to cease immediately and offer renewal to any homeowner who had received a non-renewal notice that had not yet taken effect.

“While Allstate has since rescinded any non-renewals that had not gone into effect, there was still a need for a suitable remedy for those whose policies had already been terminated and who had to find other insurance coverage,” Dinallo said. “The Department believes this agreement provides that remedy.”

Beginning January 10, 2008, Allstate will send notices to the approximately 55,000 affected former policyholders offering them the right to an immediate quote and renewal of their policies for a period of at least three years. Allstate will contact those policyholders over a 10-week period. Policyholders will have up to 12 months to accept the offer of a new policy.

“Consumers should be aware that by accepting this offer they will be releasing Allstate from any legal claims that they could have brought against the company for the termination of their earlier coverage,” Dinallo said. “It is a legal agreement, and the Insurance Department strongly suggests that consumers be sure they fully understand the terms. The Department also suggests consumers shop as carefully as they would at any other time before deciding which insurance company is right for them.”

More information on homeowners insurance, including a consumer shopping guide, is available at the New York State Insurance Department’s website at www.ins.state.ny.us.

Handling the case for the Department were Deputy Superintendent and General Counsel Robert H. Easton and Assistant Deputy Superintendent and Counsel Jon Rothblatt of the Office of General Counsel; Deputy Chief Examiner Maurice Morgenstern, Assistant Chief Examiner Gerald Scattaglia, Supervising Examiner Lucy Cilione and Supervising Actuary Anthony Yoder of the Property Bureau; and Assistant Deputy Superintendent and Bureau Chief Mitchel Gennaoui, Principal Insurance Examiner Barry Bistreich and Associate Insurance Examiners John Capuano and Daniel Bell of the Consumer Services Bureau.

Allstate companies covered by this agreement include:

Click here for complete copy of stipulation.

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