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Allstate set to drop 12K S.C. residents

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Allstate Insurance is dropping coverage for 12,000 homeowners in Beaufort County and other coastal areas of the state, making it more difficult for residents of storm-prone areas to find insurance.

The company announced Wednesday it is dropping coverage for about 16,000 homes in North and South Carolina, including policies for homeowners in Beaufort, Berkeley, Charleston, Colleton, Dorchester, Georgetown, Horry and Jasper counties. Allstate -- whose motto is "You're in good hands" -- covers 75,000 homes in South Carolina, but it did not have exact numbers on how many Beaufort County residents would be affected.

The decision not to renew policies is part of the company's effort to reduce its exposure to risk in coastal areas, which have become more populated with increasingly expensive houses. Customers who live in areas identified as susceptible to hurricanes and other storms create a financial risk that could jeopardize insurance for Allstate's other customers, company officials said.

"Essentially what we have in the coastal market, not just in South Carolina but up the eastern seaboard, we have more people living there than we ever have before," spokeswoman Renita Ward said. "Yes, it is a business decision. ... It's part of a balancing act we're doing."

Beaufort County's population grew 63 percent between 1990 and 2005, according to census data, while the 2004 property reassessment saw values skyrocket as high as 800 percent for some homes.

Coupled with meteorologists' predictions that show the busy storm cycle continuing for several years, Ward said the company has a lot to lose by insuring homeowners in the area. The problem is further complicated by the increasing cost of reinsurance, the insurance companies buy to back their own business.

Some dropped customers will have the option to work with their agent to set up a new policy through an unaffiliated third-party carrier, Kimbrell Group, said Ward. It will be up to the customer to renegotiate a policy, she said.

The news of Allstate's plans comes as another frustration for homeowners who have watched more companies shy away from writing policies in areas where high property values and high storm potential create a stew of potential financial pitfalls for insurers. Others have seen their premiums increase rapidly.

"Because of the catastrophic storms that have plagued the coast, insurance companies as a whole -- and there are no exceptions -- have determined that, insuring in coastal counties, the losses have been greater than they expected," said Jimmy Rowe, president of local Kinghorn Insurance Services.

Other insurance representatives have reported insurance providers have been writing very few if any new policies for homeowners on Hilton Head and in other coastal areas, forcing residents to either buy from companies that aren't regulated by the state or to go the S.C. Wind and Hail Underwriting Association.

It's a national trend as insurance companies reel from payouts to homeowners in the wake of one of the busiest periods of natural disasters in recent history,

including the 2004 hurricane season that pounded Florida and the 2005 hurricanes on the Gulf Coast.

Allstate's decision is expected, given the state of the industry, said Allison Dean Love, executive director of Insurance News Service, an industry-sponsored organization that provides data on insurance issues.

"With the incredible amount of development and the incredible increase in the cost of reinsurance and the values of homes, there's a lot of different things going on," Love said. "Other insurance companies are managing their growth along the coast, and they're having to make some tough choices, like non-renewing some of their existing policy holders."

The tough market is causing a strain on both customers and insurance agents, but agents can still find ways to insure homeowners, Rowe said.

"There's no need for customers to panic. Prices are more expensive today, but that's going to be true with every company," he said. "As agents, we agonize over it. It's never pleasant to deliver a change. ... The fact is, we do have a market for them. It's just a change that's agonizing."

Contact Tim Donnelly at 706-8145 or .