Insurers Restricting Coastal Exposure

The coastal home insurance market continues to tighten. State Farm is only writing a new homeowners policy in Mississippi if another is dropped and Allstate has stopped writing mobile homes on the South Carolina coast. Also, Farmers will reduce its policy count by about 10,000 in the Alabama coastal counties of Baldwin and Mobile and Liberty Mutual confirmed some cancellations in South Carolina coastal communities.

“There is not unlimited growth. There is managed growth,” State Farm spokesman Roszell Gadson told the Associated Press of its approach in Mississippi.

“This is all part of managing our growth and making sure that we’re able to take care of all the risk that we take on in case there is a catastrophe,” Gadson said.

Mississippi Insurance Commissioner Mike Chaney said he allowed the carrier to add new customers in this manner because it hasn’t been writing any new polices in the state at all since 2007. Chaney said he approved a 3.9 percent rate increase for the insurer only after it agreed to issue some new polices. But the insurer still isn’t writing policies in the state’s three coastal counties.

Meanwhile, Allstate spokesperson Shane Robinson said that about 2,400 existing South Carolina mobile home customer policies in Beaufort, Berkeley, Charleston, Colleton, Dorchester, Georgetown, Horry and Jasper coastal counties won’t be renewed.

Robinson said American Modern Insurance Group likely would offer coverage to many of the mobile home customers.

Farmers said the Alabama policies it plans to drop from July 2010 to July 2011 are less than half of what it has in the coastal counties. Chris Simich, state director for Farmers in Alabama, said the insurer “remains committed to growing” its overall business but it needs to better spread its risk across the state.

Liberty Mutual told the Associated Press it has decided not to renew about 2.5 percent of its policies in South Carolina statewide, or less than 1,000 policies, with the bulk of the cancellations affecting certain homes within 10 miles of the coast. Liberty Mutual spokesman Glenn Greenberg said the decision stemmed from a routine evaluation of its policies.

In a form letter Liberty Mutual has sent to some customers, it said it is “taking this action to reduce our exposure level related to the catastrophe of wind.”

Liberty is not pulling out of the coastal market completely but for now it isn’t writing any new business for homeowners near the ocean, according to Greenberg. “We are writing homeowners business in South Carolina,” he said. “We certainly want to grow our business in South Carolina.”

Topics Carriers Homeowners Mississippi Alabama South Carolina