Thousands of homeowners policyholders with Allstate in South Carolina could have their policies dropped by the insurer, which is sending notices to customers who have homes over 10 years old, have policies worth less than $220,000 and do not have Allstate auto coverage.
Homeowners policyholders meeting those requisites were mailed notices asking them to “contact their agent to discuss options,” according to Nancy Lemke, an Allstate spokeswoman.
The option of renewing a homeowners policy will be unavailable to customers who would have renewed that policy on Oct. 9 or afterward and do not have a South Carolina car insurance policy with Allstate that was effective before March 11, Lemke said.
The notices were mailed to around 10,000 Allstate policyholders, according to Lemke, who added that the number amounted to less than 10 percent of Allstate’s customers in South Carolina.
That “small percentage” is an important highlight, Lemke said, as the insurer makes such decisions based on its entire customer base in a state.
“Allstate’s priority is to make sure we are able to protect all of our customers in the event they suffer losses,” she said.
North Carolina Allstate Customers Faced Nonrenewals Last Year
In North Carolina in March 2011, tens of thousands of notices began to go out to Allstate residential policyholders telling them they faced nonrenewal if they did not also buy auto coverage with the company. Of those nonrenewals, about 30,000 were homeowners policyholders.
The multiline insurer has grappled with a rapidly changing auto coverage industry in which insurers like Progressive and GEICO have grown.
According to the most recent data from the National Association of Insurance Commissioners, Allstate owns the second-largest market share in auto policies in the U.S. with 10.3 percent, but is locked in a tight race with GEICO and Progressive, which have 9.1 percent and 7.9 percent shares of the market, respectively.
State Officials Discuss ‘Forced Bundling’
Some legislators and state officials around the U.S. have attacked the business practice that they call “forced bundling,” in which a customer is given the option to purchase multiple lines of insurance with a carrier or face nonrenewal.
During a March debate in Maryland over HB 1105, which would have barred forced bundling, the state’s consumer advocate for the attorney general’s office called it an “illegal and discriminatory” business practice.
Industry advocates attending the debate said consumers don’t lose out when they are forced from an agency because other options are available in the robust insurance marketplace.
Senators in the state committee ultimately refused to recommend the bill for passage to the Senate floor.