by
Carl Hampton
08/04/2006
As the hurricane season gets underway,
thousands of homeowners have started
receiving unwanted letters from Allstate
Insurance. The letter begins with,
"We're writing to you with what we know
is unfortunate news about your Allstate
Insurance. The letter then went on to say,
their home was being dropped from cover
“because it's in the path of future
hurricanes”.
You may well think that this reader lives in
New Orleans or Florida, but you would be
wrong this reader lives in New York. The
full impact of Hurricane Katrina is now
being felt many hundreds of miles away from
where it first made land last year. Many
insurers are now scrambling to reduce their
exposure to any future hurricanes that could
hit their shareholders profit.
Allstate the nations number 2 insurer is
canceling more than 30,000 homeowners
insurance in and around the coastal counties
of New York. The reason for this action they
say is the the need to protect themselves
from future storms. They (Allstate) of
course are not the only major insurance
company to do this Nationwide Mutual
Insurance Co. is also no longer writing new
policies on the eastern half of Long Island,
N.Y.
Should we really be surprised by this type
of action, no it's a strategy they have used
before. In 1992 after Hurricane Andrew most
of the insurers scaled back their presence
in Florida. This forced thousands of local
residents into using the expensive state-run
insurance pool.
These companies go to great lengths to point
out that a single event like Hurricane
Katrina could wipe out years of savings.
This they stress could very well put the
entire company with all it's policyholders
from all over the country at risk. There
reasoning behind this policy is even though
the Northeast has not had a direct hit from
a hurricane in many decades, the high
replacement value of homes in their
portfolio would make them vulnerable.
The biggest irony for me after last year's
storm is that the insurance companies had
just reported a record $43 billion profit
for the year 2005. The Insurance Information
Institute, a trade group reported that this
was an 11.7 percent increase over the
previous year and was in fact the highest
net income since 1991.
Why is it that we as homeowners are asked to
remain loyal to these “caring
companies”, our friends with safe hands.
We are requested to pay up ever increasing
amounts of money without question every
year, many of us have never made any claims,
but as soon as there “COULD, MIGHT” be a
problem we are dumped without a second
thought.
If they (the insurers) spent less of our
money on all that very expensive TV
advertising, telling us “How Wonderful”
they were going to be when we needed them
the most there would be no need to cancel
our policies.
What they are doing to us is “Legalized
Mugging” they may as well write polices
with the title NO CLAIMS POLICY. After all
we wouldn't want their shareholders to lose
any sleep over the possibility of paying out
on claims that could hit their profits.
