Court Got It Right
The decision by the Appeals Court of Maryland to allow Allstate to stop writing policies along the Atlantic Coast, while unpopular, was done for the right reason ("Court Upholds Hurricane Insurance Decision", Jan. 27).
The Maryland General Assembly’s People’s Insurance Counsel Division’s challenge, that the decision to stop writing policies along the coast was discriminatory and not based on realistic projections, chastises Allstate for taking a stronger approach towards risk management. To be over-prepared for a hurricane is better than not being prepared at all.
The reaction in the dissenting opinion made a novel argument, comparing the rarity of hurricanes in Maryland to an attack by Godzilla. Colorful arguments aside, the catastrophe models used by Allstate are widely accepted by the insurance industry while making a great effort to ensure that insurers are aware of the potential risk policyholders face along the Atlantic Coast. Hurricanes hitting the Maryland coast may be rare, but unlike Godzilla, they are a real risk that insurers and policyholders need to take into account.
(The writer is the midwest director of the Center on Finance, Insurance, and Real Estate at The Heartland Institute.)