Insurance Companies Trying to Drop Katrina Victims

A minority of New Orleanians were back a month after Hurricane Katrina, when Robyn Halvorsen returned to her unflooded Bywater home. Three months later, she had completed repairs.

Which is why she is shocked that Allstate Insurance Co. is seeking to cancel her homeowners policy next month, arguing that the property is abandoned and in disrepair. She's not alone. As of Monday, 180 homeowners had complained to the state's Insurance Department that the company is improperly canceling their policies.

Considering Allstate's aggressiveness in trying to drop customers since the storm, Insurance Commissioner Jim Donelon needs to investigate whether the recent cancellations comply with the state's rules.

Allstate says it's complying with a policy that let insurers cancel coverage that had been kept in place after Hurricanes Katrina and Rita by a recently expired emergency rule. But the new procedures require companies to physically inspect every property before canceling coverage and prevent them from dropping customers who show proof of repairs.

Allstate would not say how many customers it is seeking to shed but says it has inspected every affected property.

But it's hard to imagine how anyone would conclude that Ms. Halvorsen's home was abandoned. After getting a precancellation notice, the real estate agent said she informed Allstate about the repairs and that she was living there. "You're crazy if you think it's abandoned," she wrote of her house. The only response was a final cancellation notice this month. She said her agent told her nothing could be done.

Other paying customers who have started repairs or plan to do so but are waiting for a Road Home grant also complain that the firm is being inflexible. So far the state has only received complaints about cancellations from Allstate customers, suggesting the firm could be the first to issue notices or it could be improperly seeking to drop customers.