Clinton Reiterates Opposition to Allstate Decision to End Flood Coverage for Policy Holders in Westchester, Long Island, NYC

Calls on Allstate to Reconsider Plan which is Beginning to Impact Many Residents and Homeowners

August 13, 2007 -- Washington, DC – Senator Hillary Rodham Clinton is calling on Allstate Insurance Company to reconsider its decision to terminate flood coverage for existing policy holders in Westchester, Long Island and New York City.

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Allstate announced last year that it plans to cease writing flood policies for new homeowners and will not renew policies for current policy holders in Westchester, Long Island, and New York City. At the time, Senator Clinton called on the Allstate leadership to reconsider and explain their irresponsible decision. As policy holders are now being denied, Senator Clinton today wrote again to Allstate’s CEO, calling for a detailed explanation for the company’s actions, and urging the company to resume writing homeowners’ insurance policies for residents in Westchester, Long Island, and New York City.

“I am very disturbed to hear that Allstate is continuing with their plans to drop the policies of the customers in downstate New York. Westchester, Long Island and New York City have all been hit by severe floods in recent months and last week’s floods are just another reminder of how serious the threat can be to people’s homes and lives. New Yorkers who look to take out flood insurance are simply doing the right thing and they should not be penalized in this way or left without coverage,” Senator Clinton said.

Allstate’s action is part of efforts begun by the company in 2006 to lower its hurricane risks along the country’s eastern coast. However, their practice has been criticized as other insurers who provide coverage in the same areas and who are exposed to the same risks have not taken similarly drastic measures. The action by Allstate also leaves their present policy holders in a bind as they must now search for new insurance carriers and face the possibility of higher premiums.

A copy of Senator Clinton’s letter to Allstate CEO Thomas J. Wilson follows –

Mr. Thomas J. Wilson
Chief Executive Officer
Allstate Insurance Company
2775 Sanders Road
Northbrook, Illinois 60062

Dear Mr. Wilson:

I write you today to express my deep concern over recent actions taken by Allstate in Westchester County, Long Island, and New York City. According to recent reports, Allstate has stopped writing policies for homeowners’ coverage in these areas, and has dropped existing policy holders from coverage.

While these efforts may be in your company’s long term interests; however, it has created an immediate and significant hardship for the policyholders that you continue to drop. These policyholders will now face significantly higher premiums as they seek coverage, making it difficult for them to absorb the costs.

It is my understanding that your decision was based on a “hurricane risk management strategy” that your company implemented last year. However, it is still not clear how the perceived risk justified your sudden decision to deny coverage to your customers in New York.

Moreover, other insurers in the same areas and presumably exposed to the same risks, have not taken the extreme steps you have. These other insurers, with smaller market shares than Allstate and their risk concentrated among a significantly smaller pool of policyholders, have not dropped policies based on the threat of hurricanes.

I would appreciate a detailed explanation of the decision to drop coverage for these homeowners. Further in the absence of any compelling argument for the drastic method in which existing policyholders are being dropped, I would urge you to reconsider your decision.

Thank you for taking this into consideration and I look forward to your reply.

Sincerely yours,

Hillary Rodham Clinton

Source: Senator Hillary Rodham Clinton