Saturday, April 01, 2006

Allstate Becomes "No-State", Stops Issuing Earthquake Insurance Nationwide

Today the Anchorage Daily News reported that the nation's second largest insurer, Allstate, decided in March 2006 to stop writing earthquake insurance nationwide. Existing policies will be honored until September 15th of this year. Click here for the actual news story.

Synopsis: This is part of a series of cost-cutting measures by Allstate to reduce prospective liability. Allstate has also stopped writing any new homeowner policies in parts of the lower 48, most notably New York City, Long Island, Westchester County, and the entire state of Florida because of the immense liability possible with the catastrophic strike of a hurricane. Because Alaska is such a geologically-active state, this is of significant concern to us Alaskans, even though only 20% of Alaskan homeowners carry earthquake insurance.

To be fair, Allstate is seeking ways to soften the impact. They intend to try partnering with other insurance companies still offering earthquake coverage, so when a customer visits Allstate for conventional insurance needs, the Allstate agent will be able to immediately refer them to a choice of other companies. In response to dwindling private sector catastrophic coverage, some policymakers advocate the creation of a National Catastrophic Insurance Fund, similar in concept to current Federal flood insurance.

Officials from the Alaska Division of Insurance were quoted in the news story as stating that there are 10 carriers currently writing earthquake policies here in Anchorage. I could not find such a list; however, the Division's Alaska Insurance Consumer Guide lists several websites providing comparative quotes, as follows:

This is not spamming; I have no financial relations with these companies or websites. However, they require you to fill out a questionnaire in order to provide the quotes.

Analysis: There is no one villain in this case. Insurance companies, like other enterprises, have the right to reduce their risks. The frequency and severity of hurricanes reduces their profit margins and reduces payouts to shareholders. This causes shareholders to want to sell their stock. This is a legitimate consideration in our system. However, our willingness to build in flood plains and along vulnerable beachfronts, coupled with our unwillingness to accept the attendant greater risk compounds the problem. Furthermore, our huge national debt and the expensive, predatory policies of the current American government hinder our financial flexibility (Translation: We cannot continue living beyond our means).

However, national policy and risk reform is necessary to solve this problem.

1). Discourage construction in flood plains and along vulnerable beachfront. This means no subsidized insurance coverage for residents of such places; you build and live there strictly at your own risk.

2). Establish a National Catastrophic Insurance Fund either as a replacement form of insurance or as a reserve that insurance companies could draw from. "How do we pay for this?", you ask, when we have an $8.0 trillion national debt and annual deficits as far as the eye can see. I'm glad you asked; here are some suggestions:

a). Withdraw our troops from places where they don't belong, like Bosnia and Kosovo. Begin a phased withdrawal from Iraq. The burden of empire is too heavy, no one conferred it upon us, and it's time we shed it. America should go to war only in response to an actual attack (Afghanistan) or signs of an imminent attack. Some sources suggest that as much as 47% of our budget is allocated to the Department of Defense. This is ridiculous.

b). Deport all illegal immigrants and reduce legal immigration to manageable levels. Too many immigrants consume too many public services ast public expense. Earlier this week, a mobile home fire in East Anchorage displaced 12 residents, all immigrants. We cannot afford this. We must also eliminate birthright citizenship so that illegals can't just sneak over the border to drop a kid and then use the baby's instant citizenship as an instant conduit to suck the rest of the extended family across the border.

c). Eliminate all race and gender-based affirmative action programs in the public sector nationwide, along with the attendant bureaucracies.

d). Reduce non-emergency foreign aid whenever possible, particularly foreign aid to Israel. According to the prestigious and scholarly Washington Report on Middle East Affairs, edited by knowledgeable former Foreign Service officers, one-third of our foreign aid goes to Israel, which is 25th in the world in average per capita income. Our obsession with Israel, nurtured in part by predatory Jewish lobbies such as the Anti-Defamation League (ADL) and the American-Israel Public Affairs Committee (AIPAC), is costing us too much of our national treasure. We once said "millions for defense but not one cent for tribute". It's time we stopped paying so much "tribute" to Israel and other nations as well.

These changes will not only permit us to eliminate annual deficits and pay down the national debt, but will also permit us to provide a better life for our less fortunate citizens.


  1. The Allstate decision was actually made in late February. Funny how they did NOT make any press releases to the effect in Alaska until they were prompted by an anonymous source who called the ADN in late March that worked for the company in Alaska. So what were they hiding are why were they afraid to make public the realease? All the Allstate agents knew about this in late February. Allstate's PR Department has always had a terrible way of dealing with the public. Just do a search on the internet and the number of negatives regarding Allstate's claim procedures are astounding.

    The bottom line is, this is tragic. The insurance commisioner in Alaska is appointed, not elected. This fact has given way to the insurance companies doing business in the state to get away with anti-competitive behaviour that other states ELECTED insurance commisioners would simply not allow.

    Allstate has also recently adopted a new rating "scheme" in Alaska that uses credit as THE PRIMARY rating factor. Driving records; years experience driving; the type of car driven and the number of miles driven are all secondary rating actors when it comes to getting an Allstate preffered auto insurance rate. And forget their "Indemnity plan". Those rates are at least twice as high as their preffered program for a reason...they don't want anyone unless they can make a huge profit on the individual.

    There are NOT 10 companies doing business in Alaska that offer residential earthquake policies. Iwonder where the Allstate spokesman got that info and I wonder if the ADN reporter will be following up on that unsupported claim. Basically, Statefarm is the only one left in Alaska offering earthquake insurance and they have a strict monthly limmit as to the number of these policies that can be written.

    You are NOT in "good hand" with Allstate. You're in greedy hands with them.

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