Tuesday, February 07, 2006
Another Message
Allstate Corp. announced that it will no longer insure homes built close to the water in the New York area because of possible damage from hurricanes. Allstate's action was a clear message that it cannot handle any more storms like Katrina and the damage it wrought on the Gulf Coast. It was also a message to householders who live by the ocean. That message: "You are on your own." Of course, householders will get insurance coverage. They will pay more for it from someone else.
Allstate's action might look selfish to some, but it is courageous to others. We have known for decades that building on coastlines was dangerous, but no one would stop it. And, when there was major damage, homeowners were allowed to rebuild again only to watch their homes swept away in a few years.
Allstate's action is a common-sense stand, it seems to me, that private industry should not have to backstop foolish choices. Good PR sometimes requires one to take an unpopular position. I have no doubt Allstate is going to lose even more business in New York because of its decision, but that is better in the short run than bankruptcy in the long run.
Allstate's action might look selfish to some, but it is courageous to others. We have known for decades that building on coastlines was dangerous, but no one would stop it. And, when there was major damage, homeowners were allowed to rebuild again only to watch their homes swept away in a few years.
Allstate's action is a common-sense stand, it seems to me, that private industry should not have to backstop foolish choices. Good PR sometimes requires one to take an unpopular position. I have no doubt Allstate is going to lose even more business in New York because of its decision, but that is better in the short run than bankruptcy in the long run.
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