Allstate 2015 Annual Report Download - page 122

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• North Light, began writing homeowners in California in February 2013.Any earthquake coverage provided under
these writings (other than fire following earthquakes) is currently ceded via quota share reinsurance.
• We ceased writing new homeowners business in Florida in 2011 beyond a modest stance for existing customers who
replace their currently-insured home with an acceptable property. The Encompass companies operating in Florida
withdrew from the property lines in 2009.
• Tropical cyclone deductibles are in place for a large portion of coastal insured properties.
• We have additional catastrophe exposure, beyond the property lines, for auto customers who have purchased
physical damage coverage. Auto physical damage coverage generally includes coverage for flood-related loss. We
manage this additional exposure through inclusion of auto losses in our nationwide reinsurance program (which
excludes New Jersey and Florida). New Jersey auto losses are included in our New Jersey reinsurance program.
• Designed a homeowners new business offering, Allstate House and Home, that provides options of coverage for roof
damage including graduated coverage and pricing based on roof type and age. Allstate House and Home is currently
available in 37 states.
Hurricanes
We consider the greatest areas of potential catastrophe losses due to hurricanes generally to be major metropolitan
centers in counties along the eastern and gulf coasts of the United States. Usually, the average premium on a property policy
near these coasts is greater than in other areas. However, average premiums are often not considered commensurate with
the inherent risk of loss. In addition and as explained in Note14 of the consolidated financial statements, in various states
Allstate is subject to assessments from assigned risk plans, reinsurance facilities and joint underwriting associations
providing insurance for wind related property losses.
We have addressed our risk of hurricane loss by, among other actions, purchasing reinsurance for specific states and
on a countrywide basis for our personal lines property insurance in areas most exposed to hurricanes, limiting personal
homeowners, landlord package policy and manufactured home new business writings in coastal areas in southern and
eastern states, implementing tropical cyclone deductibles where appropriate, and not offering continuing coverage on
certain policies in coastal counties in certain states. We continue to seek appropriate returns for the risks we write. This
may require further actions, similar to those already taken, in geographies where we are not getting appropriate returns.
However, we may maintain or opportunistically increase our presence in areas where we achieve adequate returns and
do not materially increase our hurricane risk.
Earthquakes
We do not offer earthquake coverage in most states and actions taken to reduce our exposure from earthquake
losses are complete. We purchased reinsurance in the state of Kentucky and entered into arrangements in many states
to make earthquake coverage available through non-proprietary insurers.
We retain approximately 30,000 PIF with earthquake coverage, primarily in Kentucky, due to regulatory and other
reasons. We continue to have exposure to earthquake risk on certain policies that do not specifically exclude coverage
for earthquake losses, including our auto policies, and to fires following earthquakes. Allstate policyholders in the state of
California are offered coverage through the CEA, a privately-financed, publicly-managed state agency created to provide
insurance coverage for earthquake damage. Allstate is subject to assessments from the CEA under certain circumstances
as explained in Note14 of the consolidated financial statements. While North Light writes property policies in California,
which can include earthquake coverage, this coverage is 100% ceded via quota share reinsurance.
Fires Following Earthquakes
Under a standard homeowners policy we cover fire losses, including those caused by an earthquake. Actions taken
related to our risk of loss from fires following earthquakes include restrictive underwriting guidelines in California for
new business writings, purchasing reinsurance for Kentucky personal lines property risks, and purchasing nationwide
occurrence reinsurance, excluding Florida and New Jersey.
Wildfires
Actions taken related to managing our risk of loss from wildfires include changing homeowners underwriting
requirements in certain states and purchasing nationwide occurrence reinsurance. We also have inspection programs to
identify homes that are susceptible to wildfires.
Reinsurance
A description of our current catastrophe reinsurance program appears in Note 10 of the consolidated financial
statements.