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Allstate pulls out of NYC due to hurricane threat NEW YORK, Feb 6 (Reuters) - Allstate Corp. said on Monday that it wasn't renewing some of its homeowners' policies in the New York City area for fears that a major hurricane could strike in the area, leaving the insurer overexposed. Allstate considers itself overexposed along the southern New York shoreline, where it has a 26 percent share of the market. Throughout New York state it has an 18 percent market share. Is this all my fault? If so, I would like to take this opportunity to apologize to Brooklyn's home owners. For what it's worth, my house will be overrun by the fetid waters of the Gowanus Canal in the event of a Category 3. I've got nothing to gain from a direct hit on New York City except the ability to say, "I told ya so!" The sad fact of the matter is that not enough people read the New York Press to blame me for this insurance debacle. So, blame Assemblyman Richard Brodsky. And while we're at it, someone from The Weather Channel needs to send me a check. They totally plagiarized my story.
Comments
Fascinating reporting on your part on an important subject. I have one tiny criticism though. In our article, you wrote: "In fact, New York City is behind only Miami and New Orleans on the list of U.S. cities most likely to suffer a major hurricane disaster." And this sentiment was repeated in the Weather Channel's treatment of this subject. But I think an important nuance is worth emphasizing - depending on how you define "major disaster." It seems to me that there are a million other places with a higher liklihood of a major hurricane strike than New York -- any place from Cape Hatteras to Trinidad.
I think they are ranking Miami, New Orleans and New York according to some formula that weighs liklihood of a hurricane strike plus hypothetical damage caused by a strike. Thus, New York, being a big city with lots of buildings and property, would have a lot of damage, even though the liklihood itself is rather low.
Yeah. I think I originally had the source for that citation in there -- it's an insurance industry figure. Their definition of "major disaster" is one that costs a lot, i.e., destroys a lot of property, causes economic losses, and hurts or kills lots of people. I think I got rid of the explanation of "major disaster" because it was wordy and unnecessary. I mean -- sure, a big hurricane is far more likely to shellack the outer banks of South Carolina than NYC. But is it a "major disaster" if it mostly only hurts sand dunes and some beach houses?
Maybe we're not giving credit where it's due on this one. According to a story by James Bernstein in today's Newsday, Chuck Schumer has asked the NY State Insurance Dept. to launch a broad investigation of Allstate to see if this move to disinvest from the region is in anyway connected to lobbying efforts to create a federal, taxpayer funded catastrophic fund. I would be surprised, though, if anything will ever come of the investigation. It seems to me that Allstate's claim that it has simply reassessed the region's risks and its own liability is a fairly legitimate claim in the wake of Katrina.
By my estimation, though, scare tactic or not, this seems a brilliant move by Edward Liddy, the politically well-connected CEO of Allstate and major Republican donor/fund-raiser. He has been a key player on several major pieces of business friendly legislation over the past few years, including the bankruptcy reform bill and class-action lawsuit reform legislation. A federal catastrophic fund would be a crown jewel for Allstate and the entire insurance industry.
Maybe Allstate is pulling out of New York because they don't like doing business in one of the bluest of the blue states (Vermont and Massachusetts probably have us beat). I just got an e-mail message from someone I'd never heard of (i.e., spam) from an address that ended in allstate.com. The message urged me to buy a bumper sticker that read: "I'd rather hunt with Dick Cheney than ride with Ted Kennedy."
The state Insurance Department is holding hearings on the Allstate reduction today. The top New York State insurance official, Howard Mills, says he hopes that these public hearings will help both the department and the industry get a "sense of the marketplace." Not sure why they need the public for that. It'd be nice if a few of these conspiracy theories are aired out though.
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