Connecticut's top law enforcement official has reacted toAllstate's decision to hike homeowners premiums and avoid newbusiness by announcing he is investigating them along with otherinsurers being probed for antitrust violations.

State Attorney General Richard Blumenthal promised the inquiryin a statement condemning the Northbrook, Ill.-based carrier's useof computer models.

His Friday statement came after Allstate said it plans to stopwriting new homeowners insurance policies and increase premiums onexisting policyholders. The insurer denied any wrongdoing.

The other companies Mr. Blumenthal is examining are Main StreetAmerica Group Holdings, Met Property & Casualty Insurance Co.,Vermont Mutual Insurance Group, New London County Mutual InsuranceGroup Co., Fireman's Fund Insurance Co., Unitrin Inc., andLumbermen's Mutual Casualty Company. That investigation, announcedin August, which included Allstate at the time, stemmed from theirrequirement that policyholders install shutters on their homes orface policy cancellation.

Mr. Blumenthal said his office has issued subpoenas to Allstatefor "information about restrictions and premium increases by thiscompany and others, reflecting possible anticompetitive patterns inthe industry."

He said the investigation has included subpoenas and interviewsinvolving carriers, reinsurers, modelers and rating agencies todetermine if any of them have violated state antitruststatutes.

"Allstate's good hands are dropping Connecticut," Mr. Blumenthalsaid. "The company seems to put more trust in computer models andmyths than human faces and facts. Its apparent reliance on risingreinsurance costs highlights a significant reason for ourinvestigation insofar as reinsurance rates have doubled or tripledin the United States, but barely increased elsewhere in theworld."

"Despite its 'good hands' mantra, the underlying reason for thisdecision is about profits, not people," he continued. "Even ifAllstate may be within its legal rights to cease doing business inConnecticut, its decision may be the result of otheranticompetitive or antitrust practices."

Brett Ludwig, a spokesman for Allstate, said the companyreceived a subpoena in August from the attorney general and thecompany has complied fully with it. He said the company formallyinformed the state of its decision to cease writing new homeownerspolicies last Thursday.

As for the attorney general's allegations, he said, "Anyallegations regarding antitrust are unfounded and withoutmerit."

As in New Jersey (see NU Online Dec. 8), Allstate agents willhave access to other homeowner insurers to fulfill their customers'needs, Mr. Ludwig said. He added that the decision has no impact oncurrent customers.

The company plans to stop writing new homeowners policies inConnecticut on Feb. 12, 2007. It also plans to stop writing newhomeowners policies in New Jersey and Delaware next year.

After losing more than $5 billion from hurricanes in 2005,Allstate has been reducing its catastrophe risks along the EastCoast and the Gulf coast.

In addition to the three states it is no longer writing newpolicies in, it has stopped writing new homeowners policies inportions of New York, Texas, Louisiana, Mississippi, NorthCarolina, South Carolina and Georgia, primarily along thecoast.

In Florida, Allstate Floridian, a company subsidiary, hascontracted with Royal Palm Insurance Company to insure 120,000nonrenewal customers. Agents in the state have access up to 12different carriers to place business. The company said it stillinsures hundreds of thousands in the state.