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.
"Your"
Money Matters By Carl Hampton
Author of "From
Credit Despair To Credit Millionaire"
