Allstate: No new homeowners policies in Calif.

Nation's largest insurer says done to manage risk, while critics contend it is an effort to push through a rate increase.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By David Ellis, CNNMoney.com staff writer

CDs & Money Market
MMA 0.69%
$10K MMA 0.42%
6 month CD 0.94%
1 yr CD 1.49%
5 yr CD 1.93%

Find personalized rates:
 

Rates provided by Bankrate.com.

NEW YORK (CNNMoney.com) -- Allstate Corp. (ALL, Fortune 500), the largest home insurer in the United States, said this week it would no longer write new homeowner policies in California, marking another reduction in its property coverage nationwide.

The Northbrook, Ill.-based carrier, which insures about 17 million households nationwide, said the move was part of an effort to "manage the risk" of offering property insurance in "catastrophe-prone California".

Allstate said it would continue to insure its existing 900,000 policyholders in California. Those homeowners seeking coverage would be referred to another insurer, Pacific Specialty Insurance Company, which is based in California.

"Allstate is taking responsible action now so that the company will continue to be in a strong position to help protect customers in California and across the country," Robert Barge, the field vice president for Allstate in California, said in a prepared statement.

Steve Poizner, the commissioner of California's Department of Insurance, the state's regulatory body for the insurance industry, issued a statement questioning Allstate's decision.

"While the writing has been on the wall regarding its intent in California, I believe this is a short-sighted business decision," Poizner said. "I expect there will be no shortage of insurance companies who will be more than happy to compete to serve more than 1 million Allstate customers."

Last fall Allstate had proposed a 12.2 percent increase in premiums for its homeowners, its first in over three years, to cover the threat of fires and earthquakes that are known to plague California.

State regulators had questioned the proposed rate hike, pointing at Allstate rivals such as Safeco Corp. (SAF, Fortune 500) and State Farm who had reduced rates in recent years. Rumblings emerged last February that Allstate was considering tightening its policies or refusing new insurers.

One consumer group, the Foundation for Taxpayer and Consumer Rights (FTCR), argued that Allstate's decision to stop writing new policies was part of an effort to coerce the state into allowing the rate increase that is still awaiting a lawmakers' decision.

"If Allstate intended to hang the threat of leaving the state in order to pressure the state to allow them to charge excessive rates, then we say good riddance," said FTCR's Carmen Balber.

The new policy, which will take effect July 1 of this year, is the latest coverage cutback by Allstate. The carrier recently announced it would no longer write new homeowner policies in Florida, Connecticut, Delaware and New Jersey and in certain counties in the Atlantic and Gulf Coast regions.

Other insurers have made similar announcements, including State Farm, which announced earlier this year it would no longer write new homeowner and small business policies in Mississippi following a legal battle over Hurricane Katrina damage claims. To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.