Online Auto Insurance: NC Nonrenewals Highlight Insurers' Search for Competitive Edge

The recent news that Allstate will not renew the residential policies of many North Carolina customers who don't also buy auto coverage from the company highlights the increasing competition facing auto insurers, according to Online Auto Insurance (OAI).

State regulators say Allstate decided not to renew more than 40,000 of those policies because the coverage provider is trying to compete in the North Carolina car insurance market with companies that minimize costs by providing only vehicle coverage.

Most of the major companies that provide multiple types of coverage-including Allstate, State Farm, Progressive and MetLife-have suffered massive losses this year as a result of storms and other natural disasters in North Carolina and across the country.

State regulators say Allstate, which began sending nonrenewal notifications six months ago, is one of several companies streamlining operations by no longer covering those who do not buy multiple policies.

The company announced earlier this month that the more than $1.07 billion in catastrophe losses it suffered from July through September cut its profits for the period by more than half.

Allstate's announcement came on the heels of reports that other insurers had lost big money on claims filed by policyholders in the wake of severe weather events this year.

Progressive's third-quarter profits slumped 42 percent compared to the same period in 2010, with the company blaming $37 million in catastrophe losses in August. State Farm officials say they have paid out more than $5 billion in weather-related claims, and MetLife Auto & Home suffered after-tax losses from natural disasters as high as $100 million.

Many of those third-quarter losses are attributable to Hurricane Irene and Tropical Storm Lee, which swept along the East Coast within a week of each other staring in late August.

Federal officials say economic damages from catastrophic weather events this year total nearly $50 million, with Irene alone accounting for $7.3 billion in losses.

Source: http://www.ncdc.noaa.gov/oa/reports/billionz.html

Because of those heavy losses, companies are rethinking their exposures and are coming up with ways to minimize their overall risk.

Whether Allstate will expand the practice to other states along the storm-battered East Coast remains to be seen.

To learn more about this and other coverage issues, readers can go to http://www.onlineautoinsurance.com/north-carolina/ where they will find informative resource pages and a helpful rate-comparison generator.