If you have Allstate homeowner’s insurance and live in Connecticut, you probably received a letter in the past few weeks. It starts off like this:
You may have seen or heard news about Allstate’s announcement last December to change its new personal lines property business strategy in Connecticut. Currently, Allstate will continue to renew their existing property insurance customers in Connecticut, subject to Allstate’s underwriting guidelines*.
I must have missed that Allstate announcement in December. The second paragraph of the letter:
Beginning in March 2007, Allstate will not offer new property insurance policies; instead, Allstate agents will be able to assist customers in obtaining property coverage through a network of third party insurance companies not affiliated with Allstate.
After reading those two paragraphs, you might think that Allstate said it will continue to renew your existing policy, it just won’t issue new ones. This letter doesn’t apply to you. There’s nothing to worry about, and you can throw it away. Maybe you don’t even get that far. When you saw this wasn’t a bill, you didn’t bother reading it at all.
But there’s that asterisk… Right below Sincerely, The Allstate Customer Experience Team the asterisk is explained: *Please be aware that all renewals are subject to our normal review process before an offer is made. Receipt of this letter does not guarantee that you will receive an offer.
Now, it starts to sink in that this is a page-long euphemism for “you’re in good hands… but not for long.” And you start to wonder why Allstate is mobilizing the C.E.T. (‘Customer Experience Team’). There’s only one mission for this kind of team in any corporation, and it’s not to improve customer experience, it’s to defend the company from irate customers. Or future ex-customers, in this case.
Why would an insurance company be willing to offer the services of its agents to assist its own customers in finding coverage elsewhere? Why the hand off?
After Katrina, Allstate re-evaluated the hurricane and coastal flooding threat, and decided that providing insurance for coastal homes had become too risky for an insurance company that wanted to stay in business.
Last August, the Connecticut Insurance Department issued a notice to all companies writing homeowners policies in the state. The notice mentioned “predictive weather modeling that indicates an increased likelihood of a severe storm event” and reminded insurance companies that “action taken to non-renew homeowners policies solely on the basis of distance from the coastline would be considered a violation” of statutes and regulations, among them the Connecticut Unfair Insurance Trade Practices Act.
Allstate’s response (the “December Announcement” that I had missed) was to stop selling policies to all Connecticut homeowners.
“Our goal is to find solutions for consumers in potentially catastrophe-prone areas.” As long as it’s not us providing the solutions. “Allstate values your business,” we just don’t want it, “and will always do our best to keep you informed.” Until we’ve gotten rid of you. Sincerely, the C.E.T.
What is most irritating about it is that I’ve heard it before, almost word-for-word. You’re nice, just not my type. But I think you’ll really like my friend. Thank you, Allstate, for bringing back such pleasant memories.
The corporate website has a link on its home page that says America Deserves to be Better Protected from Catastrophes: That’s Allstate’s Stand. All this leaves me in awe of Allstate’s C.E.T. (that must really stand for “Creative Euphemisms Team”). The link takes you to a page that’s a year old, which is about the pending start of the 2006 hurricane season and “the potential for widespread losses due to mega catastrophes.”
That season ended with no hurricanes making U.S. landfall, the first time that has happened since 2001, and only the 11th year since 1945 that has happened. But there are those predictive weather models, and they show more severe storms and coastal flooding, a result of the general global warming trend.
Allstate supports a group called ProtectingAmerica.org. This group looks like a front for the C.E.T. “America Needs Your Voice!” the website shouts. “Our current system leaves too many people unprotected and unable to rebuild their lives following a catastrophe. We need to prepare for future catastrophes and protect ourselves.” I take it Allstate no longer considers itself a part of “our current system,” although Allstate’s actions leave too many people exposed, and the only “we” Allstate is protecting at this point is itself.
The suggestion here is that you contact your elected officials, because only federal and state legislation could provide for “a comprehensive, integrated solution that includes more protection at a lower cost for consumers through a privately funded, government sponsored nonprofit catastrophe fund.”
Huh? That sounds impressive, but maybe all it means is that someone with too much time on their hands has been playing with a set of Bureaucratic Words Refrigerator Magnets. Any sentence that has the words “comprehensive, integrated solution,” “more protection at a lower cost for consumers,” and “privately funded government sponsored nonprofit fund” is a recipe for a mega-catastrophe. But the insurance business has taken a look at the predictive weather model and decided the risk isn’t worth the business, there’s no more profit here, and the government needs to take over. Rep. Barney Frank, the new chairman of the House Financial Services Committee, agrees. Mr. Frank apparently does not know much about the predictive weather model or the insurance business.
Insurance companies understand risk. More than 50% of Americans live in coastal areas that are no longer considered safe. If you don’t want to think that Al Gore may be right, pay attention to what Allstate is doing.
Meanwhile, I see Allstate commercials all the time, but what they’re selling is car insurance. Is it just me, or is every other commercial pushing car insurance, these days? There’s the cavemen, the gecko, the dozens of other GEICO ads, Allstate, State Farm, GEICO, Prudential, and more GEICO. These guys are so hungry to help us save money, there must be a fortune to be made in this business. Which means we’re all overpaying for auto insurance, no matter how great a deal we think we’re getting.
Maybe it’s those predictive models again. Insurance companies have been watching the trends. As the world runs out of oil, and gasoline starts to become prohibitively expensive, auto insurance becomes a sucker bet that car owners are legally required to buy, even if they can no longer afford to drive to the supermarket. When gas hits $5 a gallon, collision claims will go way down. If you were selling car insurance, for a brief time you might enjoy a substantial profit margin. Eventually all those unnecessary policies would be cancelled, but by then I’m sure Allstate will figure out a way to sell bicycle insurance.