State Auto Insurance Company has decided to pull out of R.I. as well as reduce all its offerings in Massachusetts. But, this move might actually help the local insurance companies.
The Columbus, Ohio-based company has decided not to write any home, auto, or business insurance policies in Rhode Island. The company will no longer offer insurance cover in Massachusetts and it is continuing to adjust to its affiliation with the Patrons Mutual Group of Connecticut.
Narragansett Bay Insurance Company is now in an arrangement with State Auto and will extend offers to the State Auto customers of both states beginning January 1. As per the agreement, there are a total of $9 million premiums and over 10,000 home insurance policies.
CEO of Narragansett Bay, Nick Steffey has stated that they are extremely excited to be offering insurance to the growing as well as stable homeowners market in this region, while the other carriers are reexamining their strategies. This will help them grow along with the existing independent agents as well as the new agent partners.
The actual number of policyholders who would be affected because of the pullout from Rhode Island by State Auto was not really clear, said the spokesman for State Auto. Although the policyholders in Massachusetts and Rhode Island would be affected with this decision, State Auto has said that it will continue offering business and farm insurance in the state of Massachusetts.
Director of media relations at State Auto, Kyle Anderson has stated that the decision to pull out had nothing to do with the economic situation in Rhode Island or due to any other regulatory binding.
State Auto had actually reexamined their business strategies after their affiliation with Patrons during 2007 and they felt that it just didn’t make sense to continue doing business in Rhode Island.
But some experts from the insurance sector suspect that the insurers are pulling out of Rhode Island because they are skeptical about the losses that they can incur from hurricane damage. Ever since hurricane Katrina caused widespread destruction and devastation in the Gulf Coast during 2005, coastal property owners have witnessed their rates skyrocket and they also have bigger deductibles for storm damage that is added to their policies now.
Mark A. Male who is the executive VP, Independent Insurance Agents of Rhode Island as well as Francis A. Mancini, president & CEO, Massachusetts Association of Insurance Agents issued a joint statement and applauded NBIC as well as State Auto for developing this cooperative solution.