Insurer to end some policies on coast

San Antonio Lightning ^ | 9/15/06 | By PURVA PATEL

[laotzu]

Thousands of State Farm Lloyds customers along the coast will lose their property insurance starting next year.

The state's largest insurer said Thursday it plans to not renew 6,000 personal and commercial policies on properties within 2,500 feet of coastal waters or bays, on a barrier island or peninsula.

That means nonrenewals for about 780 policies in Harris County and 3,200 policies in Galveston County, according to company spokeswoman Sophie Harbert.

"Reducing our waterfront exposure will allow State Farm to meet the needs of more customers elsewhere in the coastal market that we might not otherwise be able to write at all," Harbert said.

Consumers can shop around for new insurance, but many may be forced to find windstorm insurance with the state wind pool.

State Farm also plans to not renew about 70 apartment and condo association policies on properties east of U.S. 59 and Texas 288 in Harris County. Those policies are concentrated in Southeast Houston, but Harbert could not say how far north the nonrenewals would extend.

The company has about 230 apartment or condo association policies in Harris County.

State insurance regulators, who are butting heads with the company in court over its homeowner rates, said they would give the move close scrutiny.

"Somebody's got to look out for all the homeowners," Jim Hurley, a spokesman for the department, said.

The move comes as more companies are cutting back how much they insure along the coast and as condo associations and apartment complexes in the Houston area face scarce and more costly coverage.

Some condo owners in southern Harris County will ask regulators at a hearing in Austin on Tuesday to expand the state windstorm association into their area.

The Texas Windstorm Insurance Association, which tends to have lower rates for windstorm coverage, sells only to residents in coastal counties and a sliver of Harris County. If its coverage area is expanded, the association may be able to pick up the wind coverage State Farm drops.

But the association and insurance industry oppose an expansion because, they say, it would only compound problems for the woefully underfunded association.

Allstate Texas Lloyds, the state's second-largest home insurer, said earlier this year that it would drop wind coverage upon renewal of some 65,000 homeowner policies along the coast and not renew about 16,000 nonbrick homes in counties once removed from the coast.

Several smaller insurance companies also said they would cut coverage along the coast this year.

State Farm will continue to sell new home insurance and windstorm coverage for homes more than a mile inland in coastal counties, but homes will have to meet certain new requirements, including obtaining a building code certificate from the Texas Windstorm Insurance Association.

Customers with homes between the 2,500-foot mark and a mile will be able to renew, but the company will not sell new policies.

The requirement won't apply to its renewal business, but State Farm Lloyds hopes it will encourage greater use of and more enforcement of building codes along the coast, Harbert said.

[CharlesWayneCT]

Apparently the state won't let them charge the appropriate risk value for these properties, so the insurance company has to drop them.

I guess the state could require them to issue policies in order to stay in the state, but I think some insurance company actually pulled out of florida when they tried that.

Government wants to look like they are helping people, but what they are trying to do is look good for some people while passing the cost off to others in the form of higher premiums, hoping they won't notice or know who to blame.

Why should I pay higher insurance than is necessary to cover the risks to MY home just so someone else can own property in a hurricane zone and not have to pay the true costs of their stupidity?