Commissioner of Insurance Jim Donelon will send Department of Insurance staff to
inspect the properties of 18 policyholders in Jefferson, Orleans and St. Bernard
Parishes who complained to the Department that their homeowners insurance was improperly
canceled. To date, the Department has received 386 complaints from Allstate policyholders
regarding the cancellation of their homeowners policies.
The cancellations come following the sunset of Emergency Rule 23, a policyholder
protection measure put in place by the Commissioner of Insurance following Hurricanes
Katrina and Rita. Emergency Rule 23 did the following:
(1) Suspended the right of any insurance company to cancel or non-renew properties
in Louisiana that sustained damage as a result of the hurricanes until December
31, 2006, as long as the property owners paid their premium.
(2) Required insurers to complete a physical inspection of the subject property
no earlier than December 1, 2006 or 30 days prior to the cancellation or non-renewal
of a policy after the sunset of Emergency Rule 23.
(3) Required insurers to send a preliminary letter to the policyholder advising
them of the specific damage to the property that still remained that would entitle
the insurer to cancel the policy due to "a material change in the risk being
insured." The homeowner had 30 days to respond to the company and provide documentation
that repairs had already been completed or were in the process of being completed,
thereby negating any cancellation.
By close of business Monday, the Department had received 180 complaints against
Allstate regarding homeowner policy cancellations. Of those 180 complaints, Department
staff selected 18 complaints (or 10%) where policyholders stated they had been back
in their homes at the time of the alleged home inspection by Allstate.
Commissioner Donelon directed Allstate to provide proof of inspections on those
18 homes by the close of business yesterday. After reviewing the documentation from
Allstate this morning, Donelon said he has serious reservations about the validity
of Allstate's inspection program.
"I do not believe Allstate has provided me with sufficient documentation to
validate the inspection of these homes," Donelon said. "My staff will
visit these 18 properties, conduct interviews with each of the homeowners and photograph
their property as part of this Department's investigation of Allstate. Should our
findings show that Allstate misrepresented the inspection program, I will impose
severe penalties against the company," Donelon added.
Commissioner Donelon said in the meantime the Department is conducting a one-on-one
investigation of every complaint it receives against Allstate. Department staff
are in contact with Allstate officials twice daily, providing the company with the
name and policy number of each policyholder who has registered a complaint. So far,
of the 182 complaints worked to date, the Department has been successful in having
Allstate reinstate homeowners insurance for 76 policyholders. Of the remaining 106
complaints handled so far, Allstate’s present position is that the company
does not have the proper documentation to render a final decision. The Department
is working with the homeowner to get that proper documentation to Allstate in order
to compel reinstatement where deemed appropriate.
Commissioner Donelon said homeowners receiving a premium refund with their cancellation
should hold the check and not cash it until they get final word as to whether or
not they will be reinstated.
If any homeowner feels they have been improperly canceled by Allstate or any other
insurance company, they should call the Department of Insurance at 1-800-259-5300.