State Auto Insurance a Columbus, Ohio-based company, has decided to pull out of Rhode Island and also to reduce its offering in the State of Massachusetts. This might actually prove to be beneficial for a Pawtucket insurance company.
Now, State Auto Insurance has stopped writing new home, auto, or business insurance policies in Rhode Island. It will no longer have its offerings at Massachusetts as it is trying to make readjustments after the affiliations with Patrons Mutual Group, Connecticut.
As per this arrangement with State Auto, Narragansett Bay Insurance Co. would be extending its offers to the State Auto Insurance customers in both these states beginning Jan 1. This agreement includes over 10,000 home insurance policies and around $9 million by way of total premiums.
Nick Steffey, CEO, Narragansett Bay has stated that they are extremely excited that they have an opportunity to provide a stable and growing homeowners market in the Northeast sector, even as the other carriers are reexamining their strategies. He added that this would allow them to grow with new agent partners as well as the current independent agents.
However, a spokesman of State Auto Insurance has stated that the clear picture about the number of policyholders who would be affected in Massachusetts and Rhode Island is still unclear. State Auto has stated that the offerings for farm and business insurance would still continue in Massachusetts.
Director of media relations from State Auto, Kyle Anderson has stated that the decision was not due to the economic conditions in Rhode Island or due to the regulatory environment over there.
State Auto had reexamined the business strategies following the affiliation with Patrons in 2007. Anderson stated that it did not benefit them to maintain the business in Rhode Island.
But some from the insurance industry feel that insurers are disinterested in doing business in Rhode Island due to fears of undergoing heavy losses due to hurricanes. Ever since Hurricane Katrina had caused devastation to the Gulf Coast during 2005, companies have become wary of coastal insurance. Now, there are huge deductibles for storm damage and the insurance rates have also skyrocketed for those property owners in these coastal regions.
Francis Mancini, CEO and President of Massachusetts Association of Insurance Agents of Rhode Island is said to have recognized that consolidation & market retrenchment has continued in coastal states. He also applauded the NBIC as well as State Auto for coming together to find a workable solution for customers as well as independent agents.
