Allstate’s North Light Specialty to Offer Policies in Alabama, Including Coast

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May 19, 2009 Tuesday 04:05 PM EST

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Allstate's North Light Specialty to Offer Policies in Alabama, Including Coast

Chad Hemenway

MOBILE, Ala.

Allstate Corp. has found a way to write wind policies on the coast and other "hard risk" areas in Alabama. The company is the parent to a new surplus lines carrier, North Light Specialty Insurance Co., which just began selling policies in the state.

"We just wanted to provide agents here with another option to offer -- another alternative," said Allstate spokesman Shane Robinson. "These policies won't be offered just on the coast, but throughout Alabama."

Following Hurricane Katrina, Allstate, State Farm and Alfa Insurance announced cutbacks in policies in the two coastal counties, Baldwin and Mobile. Last year, Alabama legislators created a law to allow municipalities and homeowners associations in the coastal counties to form captive companies in order to provide another option in those areas and to lower rates (BestWire, May 13, 2008).

Market share for State Farm, Alfa and Allstate-- the three largest writers of homeowners multiperil in the state -- has steadily decreased since 2006, based on direct premiums written, according to BestLink.

Surplus lines carriers are afforded some regulatory freedom, because the insurers take on risks of an unusual nature which require some flexibility in policy terms and conditions that exist in a standard policy. Rates are not approved before they are used. In Alabama, consumers must be denied by two regulated homeowners insurers before an agent can suggest a surplus carrier, Robinson said.

Writing in the surplus market also "allows some freedom with technology used in assigning risk," said Robinson. While in the more traditional market, insurers must wait months for approvals of technology usage, surplus carriers can put it to use right away, he said.

Allstate Insurance Group currently has a Best's Financial Strength Rating of A+ (Superior).

In April A.M. Best Co. assigned a Financial Strength Rating of A (Excellent) to North Light Specialty Insurance Co. Domiciled in Illinois, North Light wrote exclusively in South Carolina in 2008 with $79,000 of direct premiums written, according to an A.M. Best credit report.

In 2008, the top five writers of homeowners multiperil in Alabama, according to A.M. Best Co. state/line product information based on direct premiums written, were: State Farm Group, with a 27.4% market share; Alfa Insurance Group, with 19%; Allstate Insurance Group, with 11.6%; Farmers Insurance Group, with 8.5%; and Travelers Insurance Cos., with 5.2%.

(By Chad Hemenway, associate editor, BestWeek: [email protected])

May 20, 2009