Released: April 26, 2006

Strapped insurers flee coastal areas

Source: By Marilyn Adams, USA Today

With the 2006 hurricane season starting in just five weeks, many home insurers from Texas to Florida to New York are canceling policies along the coast or refusing to sell new ones out of fear of another catastrophic storm. In the widest insurance retreat from coastal property since Hurricane Andrew slammed Florida in 1992, insurers as far north as Long Island, N.Y., and Cape Cod, Mass., are shedding coastal homeowners policies to reduce their exposure.

In Florida alone, insurers that are undercapitalized or fearful of losses have notified the state of plans to cancel more than 500,000 homeowners policies. With $2 trillion each in coastal property, Florida and New York lead the USA in coastal exposure, followed by Texas and Massachusetts.

Companies including Allstate, the USA’s second-biggest property insurer, say forecasts of more major hurricanes combined with soaring coastal real estate development have created unacceptable risk in some areas.

Last year’s hurricanes cost insurers a record $60 billion in claims payouts. Now Allstate, which paid out a record $5 billion in hurricane claims last year, is canceling 95,000 policies in Florida and 28,000 in New York.

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