In the past week, various insurers have announced decisions to nonrenew limited numbers of policies in geographic areas prone to hurricanes. Here is a summary compiled from press reports:

Alabama:  State Farm Fire & Casualty Co. said it will not renew homeowners coverage for 2,600 policyholders located on Alabama’s coast. The announcement comes on the heels of the company’s attempts to craft a multimillion-dollar lawsuit settlement in Mississippi for disputed Hurricane Katrina-related claims. David Majors, a State Farm spokesman, said the company’s decision concerning its Alabama coastal exposure was not based on the recent Mississippi settlement attempts. “This is an ongoing process, assessing the risks that we’ll take along coastal areas,” he said. Majors said State Farm has not ruled out scaling back on homeowners coverage in Mississippi or other Gulf Coast states.

Florida: The Hartford Financial Services Group has said it will not renew about 38,000 homeowner policies in Florida beginning August 2008.  However, it will continue to write about 80,000 homeowner policies in the state through its partnership with the American Association of Retired Persons (AARP). The company also plans to reduce its commercial insurance accounts in the state by about a third.  Hartford spokesman Joe Loparco clarified that the insurer was not pulling out of the state and that the insurer had notified the Florida Office of Insurance Regulation of its plans four days before Gov. Crist’s emergency order to freeze rates for all insurers and place a moratorium on nonrenewals for at least 90 days.

New York:  An increasing number of homeowners insurers are limiting their exposure in coastal areas of New York. They now include Allstate, Travelers, Liberty Mutual and Nationwide. None of the insurers has completely withdrawn from the market recently, but the state Insurance Department is concerned and looking into the situation.

South Carolina:  State Farm, South Carolina’s largest property insurer, is reducing its coverage along the coast from Myrtle Beach to Charleston to Hilton Head Island by about 1,000 policies.  These cutbacks, which represent about one-half of 1 percent of State Farm’s homeowners policies statewide, will likely add to the burden of the S.C. Wind and Hail Underwriting Association, the state-run insurer of last resort. South Carolina State Senate President Pro Tem Glenn McConnell recently said he is considering legislation that will force companies to write all types of insurance.

February 6, 2007