Insurers Ordered to Stop Mono-Line Practice in AL

Alabama Insurance Commissioner Walter Bell, has issued an order to insurers to stop offering insurance such as homeowners on the condition the customer also purchase another policy with the same company, known as "mono-line status" or "tying". One of these companies is Allstate, which said it is now involved in "productive dialogue" with Bell. 
 
Bell also said in a statement that insurers that did not renew policyholders on this condition must re-offer coverage to the affected customers. 
 
"These activities, we strongly believe, are prohibited by the Alabama Trade Practices Law," Bell said. "We are telling every insurer that has non-renewed a policy using this method to rescind the non-renewal and offer the consumer coverage again." 
 
Allstate, the third-largest homeowners insurer in the state, announced more than a year ago that it was pulling back coverage in Alabama as well as other coastal states including Maryland, North Carolina, South Carolina and Virginia. As many as 10,500 homeowners policies were reportedly dropped in Alabama, especially in Baldwin and Mobile counties, which border the Gulf of Mexico. 
 
Company spokesman Shane Robinson said Allstate's conversations with Bell surround his interpretation of the trade practices law. Robinson said he was unsure how many policies Allstate has dropped will be affected by Bell's order. 
 
Shortly before he became president of the National Association of Insurance Commissioners in 2007, Bell said he was trying to find stability in the marketplace while "trying to keep the state out of the insurance business and make it appealing enough for the private market to come in." He said, at the time, that rates in Baldwin and Mobile counties skyrocketed but the rest of the state had a "robust market" with decreasing premiums. 
 
Last December, Allstate insurance companies operating in New York agreed to offer 55,000 previously denied coastal county residents another chance at new homeowners coverage, after the company reached an agreement with Insurance Superintendent Eric Dinallo. Dinallo had found the company in violation of the state insurance laws because Allstate was not renewing claims if the residents did not have some kind of other insurance coverage, such as automobile or life, with Allstate. 
 
Allstate maintained it did not illegally use mono-line status as a criterion for non-renewal. 
 
In February 2007, State Farm said it was not renewing homeowners coverage for about 2,600 policyholders located on Alabama's coast. Most of the policies were for condominium units, a company spokesman had said. A spokesman could not immediately be reached to comment if Bell's most recent order would affect the company. 
 
In 2006, the top five writers of homeowners multi-peril in Alabama, according to A.M. Best Co. state/line product information based on direct premiums written, were: State Farm Group, with a 29.1% market share; Alfa Insurance Group, with 20.4%; Allstate Insurance Group, with 12.3%; Farmers Insurance Group, with 7%; and Travelers Insurance Cos., with 4.6%.