WASHINGTON, April 29 (UPI) -- U.S. insurance companies are becoming less willing to pay for major disasters, pulling back from coastal areas vulnerable to hurricanes.
Since Hurricane Katrina struck the Gulf Coast, Allstate, the country's second-largest insurer, has stopped writing policies for homes in Louisiana, Florida and the coasts of New York and Texas, the Washington Post reported. Allstate has also stopped insuring against earthquakes in quake-prone parts of California.
Allstate is not the only company balking at risky areas. Half-a-million policyholders in Florida face loss of insurance coverage.
At the same time, the big insurers have joined with state regulators to push the federal government into a bigger role in disaster coverage.
Robert Litan, a senior fellow at the Brookings Institution, is working with regulators in New York, California, Illinois and Florida on ways to provide catastrophic coverage.
"There is a potential market failure here, if not already an actual market failure at work," Litan said. "If we have another hurricane season this year like we had last, I wouldn't be surprised if you see a stampede of insurers trying to get out."
