U.S. Senator Charles E. Schumer, D-N.Y., has blasted State Farm for the company's "arbitrary and capricious decisions" to cancel homeowners insurance policies for Long Island residents.

Sen. Schumer issued a press release that stated he has received "several calls in the last six months" from residents of Long Island who have had their policies cancelled, according to a report in Newsday. He cited concerns that homeowners would be forced to carry insurance with higher premiums and less favorable terms because of State Farm's decision.

State Farm and other insurers have taken steps to cancel and/or non-renew some homeowners policies in coastal areas since Hurricane Katrina slammed the Gulf Coast in 2005. Insurers have cited the potential danger of a major hurricane tracking along the East Coast up to New England as the reason for wanting to reduce their coastal exposure.

Jawanza Ali Keita, spokesperson for State Farm, responding to Sen. Schumer's statements, said, "We are aware of the...statements that the Senator has made, and we are currently in the process of reaching out to him to open the lines of dialogue and just to ensure that his office has accurate and factual information about our business decision on Long Island."

While Sen. Schumer called State Farm's decision "arbitrary and capricious," according to Newsday, Andy Mais, spokesman for the New York State Insurance Department, told NU Online that State Farm was one of several companies that had notified the department over a year ago that it planned to re-evaluate its exposure in the coastal areas of New York.

Mr. Mais confirmed that the department has received about 40 complaints that are being investigated.

Mr. Keita stated that the State Farm's actions on Long Island have been consistent with the plan that the company filed with the Insurance Department.

New York State Superintendent of Insurance Eric Dinallo has stated numerous times, including in testimony delivered to the New York State Senate Insurance Committee in October, that he does not consider the insurance availability situation along the coast a "crisis."

Mr. Dinallo has acknowledged the recent cancellations and the increasing rates in areas such as Long Island, but he has maintained that there is still capacity in the area.

Mr. Mais said the department will continue to monitor the state of the homeowners insurance market on Long Island.

To address the situation on Long Island, Newsday reported that Sen. Schumer said he will propose a bill to increase coverage limits in high-risk areas. He also will propose a commission to look into whether insurers are abandoning communities perceived as high-risk.

NU Online made several calls to various offices of Sen. Schumer to obtain a copy of the press release, but the office did not provide a copy immediately. A spokesperson for his office confirmed the Senator's remarks.

Special Reports /

Sen. Schumer Slams State Farm For Cancelling L.I. Policies

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