Forcing insurers to write policies for homeowners in places they don?t want to makes no sense on multiple levels.
But that is exactly what a proposed bill in the General Assembly would do if enacted.
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Ever since Allstate Corp., Maryland?s second-largest home insurer, said late last year that it would stop writing new policies for certain coastal areas in the state, regulators have flooded the company with inquiries. The company has since said it is reconsidering or at least postponing its decision to stop writing new homeowner policies in certain areas. But coercion is not the answer.
Dictating how a firm does business must not be the business of the legislature, at least not one that wants to attract business to the state. Besides, didn?t it learn a lesson from its failed attempt to bend Wal-Mart to its will in forcing the big retailer to provide health insurance for its employees? Different set of legal circumstances, but same short-sighted attitude.
Second, let?s say Allstate decides against insuring new homes in areas deemed a high risk for hurricanes and flooding and the legislature forces them to do so.
That would mean homeowners in less risky areas will subsidize those in high-risk areas.
Is the legislature asking those who don?t live on the beach to hold down insurance pricing for those who do?
Third, do legislators really want to give developers a free pass to build houses in areas likely to be trampled by storms? That sounds like a lousy environmental policy for such a progressive General Assembly. Insurers decide where to insure for good reasons. If they do not want to write new policies in certain areas, the state should listen, unless it wants taxpayers to bail out insurers going bankrupt paying out claims for policies they never should have written in the first place.
Allstate and State Farm Insurance Cos. and Nationwide Mutual Insurance Co. ? which have cut back business in coastal areas in the state recently ? are renewing current policy holders. The only people who would be affected are those who want to build in high-risk areas. Letting that building go forward is a recipe for creating Maryland?s own Katrina.
Unless lawmakers want to be complicit in fomenting disaster, they will drop the legislation being considered and leave the risk-modeling to those who understand it best, insurance companies.
