Friday, 25 November 2011
North Carolina Insurance Customers Upset At Policy Linking
According to some insurance customers in North Carolina, they’re being forced to buy auto policies with their current insurance companies or risk having their coverage being cancelled. Some companies such as N.C. Farm Bureau and Allstate are linking auto and homeowners policies across the state, which means they want you to purchase both types of insurance from them.
If you don't possess an auto policy with Allstate then the company won’t renew the customer’s homeowners policy. With the Farm Bureau, they won’t renew your homeowners plan if you don’t have an auto policy with them and if you’ve filed a homeowners claim in the last five years. Also, new Farm Bureau clients who are looking to buy homeowners insurance are required to purchase auto insurance from them.
While it doesn’t sound like a fair business practice to many, it’s still legal. Farm Bureau said it will consider renewing a customer’s homeowners policy if they decide to buy auto coverage after hearing of the company’s guidelines. However, according to Allstate, they don’t offer that option.
Allstate's new underwriting guidelines came into effect at the start of 2011 and according to an article by newsobserver.com, they will affect approximately 45,000 homeowner policyholders. Farm Bureau is set to introduce the guidelines on Jan. 1, 2012 and will affect 28,000 policyholders. Both insurers said their customers are be notified of the new system between 60 and 90 days ahead of their renewal date.
The State Insurance Department said it has received only 33 complaints so far about the policy-linking system even though many residents don’t think it’s a fair practice. Bob Mack, who is a deputy commissioner with the Insurance Department, said that underwriting guidelines aren’t regulated by state law. The guidelines explain the circumstances that an insurance carrier will sell a policy under.
Similar guidelines have been used in the past in North Carolina as well as in other states. However, they haven’t always been successful. Back in 2007 New York regulators told Allstate to stop linking its homeowners policies to life insurance or auto policies. New York regulators said the system violated anti-discrimination and anti-rebating sections of the state’s insurance law. Although Allstate followed the order, it said it still had the right to link its policies.
In North Carolina, the policy linkage is considered to be one-way. This means that both insurers will supply clients with auto insurance without the need for a homeowners policy, but won’t renew the homeowners plan without auto coverage.
