Allstate Mandates 5% Storm Deductible In La.

Allstate, Louisiana's second largest insurer, implemented a statewide mandatory 5 percent hurricane deductible on renewed homeowners policies this month, the company said.

Meanwhile, an agents group said that while smaller companies are raising deductibles, bigger insurers have not raised deductible amounts.

With the 5 percent deductible policyholders would, for example, pay the first $15,000 of storm damage to a $300,000 home.

Allstate consumers will receive a lower premium as a result of the 5 percent increase. Allstate will alter premiums "according to the deductible increase," said April Eaton-Robinson, spokesperson for the Northbrook, Ill.-company.

Allstate is the leading insurance company in increasing deductibles, according to Jeff Albright, chief executive officer at Independent Insurance Agents and Brokers of Louisiana.

"Allstate is the highest-profile company on the issue of raising the deductibles to 5 percent, but it's because they have significant market share," said Mr. Albright.

Smaller companies are doing it on a prospective basis, he noted.

Other small companies have gone to 5 percent deductibles or implemented wind and hail coverage policies, according to Mr. Albright.

Larger companies--such as Allstate's competitor, State Farm--have been less active in deductible initiatives, as "they have taken a moderate approach...and have restricted the writing of new business because they control approximately 35 percent of the market in Louisiana," he said.

The 5 percent mandatory hurricane deductible policy took effect after first being given the green light by the Louisiana Department of Insurance, only to be rejected by the Insurance Rating Commission in December 2006.