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Allstate to give reprieve on homeowners' policies

Shown is the shoreline of Fire Island and

Shown is the shoreline of Fire Island and Robert Moses State Park. (March 16, 2010) Photo Credit: Photo by SM KEVIN COUGHLIN/CIVIL AIR PATR

Allstate Insurance Co., the firm with the largest share of the homeowners insurance market in downstate New York, will stop canceling policies for three months beginning May 1.

Krista Conte, a spokesman for Allstate in New York, said the company will be considering its "next steps" during the suspension of its plan to reduce its exposure to large payouts in coastal communities.

Under state law, insurance companies fearing large payouts after a major storm may not renew up to 4 percent of its homeowner customers statewide each year to reduce risk. Like other insurance companies, Allstate has cited homes close to water as one of the reasons for not renewing homeowner policies on Long Island.

During an insurance forum in Long Beach Thursday night, Ivan Lafayette, deputy superintendent for community affairs with the New York Department of Insurance, said that Allstate customers would be given the opportunity to renew their policies despite any correspondence from the company announcing policy cancellations.

Conte said Friday that Allstate had reduced its market share in the eight-county downstate region, including Nassau and Suffolk counties, from 26 percent in mid-2006 to 20 percent.

"We've made significant progress toward reducing our exposure to catastrophic loss," Conte said.

Ron Klug, a spokesman for the Insurance Department, said Friday that Allstate approached insurance-industry regulators last week with plans for a temporary halt to cancellations.

"We're very pleased to have that happen," Klug said.

Complaints the Insurance Department received last year about nonrenewals of policies in Nassau and Suffolk counties dropped to 303 from 570 in 2008, according to statistics provided by Klug.

This year, there have been 63 complaints. The state agency investigates consumer complaints and makes a ruling. In 2008, 129 of the 570 complaints were upheld, according to the statistics.

Under state law, an insurance company can only "nonrenew" a policy at the end of a three-year period. Consumers must be advised of the cancellation between 45 and 60 days. Customers must be given a valid reason for the nonrenewal. Nonrenewals are capped at a statewide average of 4 percent, Klug said.

In December, the Insurance Department required State Farm Insurance Co. to give 113 Long Island property owners the opportunity to renew their policies. The action came after a homeowner's complaint.

Regulators found that the nonrenewal notices sent by State Farm, second to Allstate in market share, failed to notify homeowners of government-backed insurance programs available to them.

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