The state insurance superintendent is reviewing Allstate and Liberty Mutual insurance companies’ practice of taking into account a policyholder’s choice of auto insurance when deciding whether to renew homeowner policies, state officials said.
Since March 2006, thousands of Long Islanders - more than 9,000 homeowners in Suffolk County and more than 6,500 in Nassau - have received letters stating that their homeowner’s insurance policy wasn’t being renewed.
“We are very concerned about insurers seeming to tie homeowners and auto or life insurance policies,” said Eric R. Dinallo, superintendent of the Insurance Department. “We are thoroughly reviewing this matter and will have a clear opinion shortly.”
The Insurance Department’s review of companies’ possible use of auto insurance coverage as a condition for renewing other types of policies has another component as well.
Forecasters say Long Island is overdue for a major storm. And insurance regulators say a company not renewing a policy based on a home’s vulnerability to a hurricane - due to its construction or nearness to the coast - is legal and legitimate. However, they say, adding the fact that the policyholder doesn’t have auto insurance with the company is questionable.
“The legal issue in question basically comes down to whether they are tying one policy to the other,” said Sal Castiglione, assistant deputy superintendent of the Insurance Department. “Under the state’s insurance law, you cannot provide any kind of inducement in the policy that’s not listed in the policy.”
“It’s almost like a future inducement,” he added.
James Gray of Garden City is a longtime customer of Liberty Mutual who has questions about why his homeowner’s policy of 30 years is not being renewed.
In a letter dated July 13, Liberty Mutual cited “hurricane events over the past two years” for forcing the company to “make some difficult decisions regarding our overall hurricane exposure along the East Coast, including New York.”
The letter said Gray’s homeowner’s policy, which expires Sept. 8, would not be renewed and gave three reasons: his home’s wood-frame construction, its closeness to the Atlantic Coast, and the fact that Gray did not have an auto insurance policy with Liberty Mutual.
Gray, 82, who says he filed one claim under his Liberty Mutual homeowner’s policy over three decades, called the company’s action “a public relations blunder.”
“At no time did anyone from Liberty Mutual give me any indication that there was a quid pro quo, that you have to have an auto insurance policy to have a homeowner’s policy,” he said.
Said Gray’s daughter, Pamela Ahearn, who lives in New Orleans: “I wonder if this is a strong-arm tactic to get you to take out an auto policy.”
Liberty Mutual spokesman Glenn Greenberg, in an interview last month, said the company can’t require a customer to purchase auto insurance to keep their homeowner’s insurance.
Generally, Greenberg said, customers who have one policy are a poor risk, tending to stay with the company less time than customers with two policies. Customers with one policy often file more claims, he said.
Greenberg said the company would review Gray’s policy a second time.
In the state’s review of Allstate and Liberty Mutual, Insurance Department spokesman Andy Mais said the agency’s in-house counsel may have a legal opinion early this week.
An Allstate spokeswoman, Krista Conte, said: “We frequently dialogue with the state Insurance Department. Any request that they have, we will certainly address it.”
Asked about the state’s review, Greenberg said Liberty Mutual’s plan to reduce the number of homeowner policies in New York has been approved by state regulators. That includes “the factors that we would take into consideration” when deciding which policies would not be renewed, he said.
Mais said there was no indication that anyone in the department’s current or previous administration had allowed any linkage of auto and homeowner’s policies.
“This department didn’t approve any plan tying non-renewing homeowner insurance policies to having other insurance policies with the same company,” Mais said.
Under state law, insurance companies can opt not to renew up to 4 percent of their policies statewide.
Allstate has 26 percent of the Long Island homeowner’s insurance market.
Liberty Mutual has 8 percent of the Island’s homeowner’s insurance market.
More than 9,000
Suffolk homeowners received letters since March 2006 saying their policy wasn’t being renewed
More than 6,500
Nassau homeowners in the same situation
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