Released: March 20, 2007

Commissioner of Insurance Jim Donelon announced today that he has reached a favorable settlement for the 4,772 Allstate policyholders in four south Louisiana parishes whose homeowners insurance was cancelled as part of the company's flawed home inspection process. The cancellations have resulted in 775 policyholder complaints being filed with the Department of Insurance.

Commissioner Donelon stated that the Consent Agreement not only grants prompt reinstatement to those policyholders who were wronged by the flawed inspection process, but adds two favorable provisions: an additional six weeks to qualify for reinstatement and to begin the repair process; and the right for Allstate insureds not ready to repair their homes the option to still obtain new coverage until December 31, 2008.

The terms of the Consent Agreement include the following:

(1) By Friday, March 23, Allstate will mail a "Notice of Right to Reinstatement" to each of the 4,772 homeowners in Jefferson, Orleans, Plaquemines and St. Bernard Parishes who received a cancellation letter due to an alleged substantial change in the risk. This does not include those homeowners who have voluntarily agreed to cancel their coverage or those who have already been reinstated by Allstate.

This notice will give the cancelled policyholder the right to full reinstatement of their original policy without a lapse in coverage if the policyholder provides one of the following to Allstate by Monday, April 30:

• Satisfactory evidence that the insured premises is currently inhabited by the policyholder and in insurable condition; or

• Satisfactory evidence that the insured location is currently under active reconstruction.

Satisfactory evidence shall include a copy of: a properly issued building permit for the insured premises; a 2007 utility bill for the insured premises; a signed agreement with a contractor for the insured premises; or material receipts indicating the policyholder's intent to reconstruct or repair the insured premises. Homeowners are also entitled to have their property reinspected as satisfactory evidence of insurability.

(2) Allstate will reimburse any cancelled policyholder who was forced to retain substitute insurance coverage with another carrier in the interim period between notice of cancellation and reinstatement.

(3) Allstate will maintain a separate database of all policyholders requesting reinstatement but who are unable to establish their right to reinstatement under this Consent Agreement. Until December 31, 2008, these policyholders have the option of purchasing a new 12-month homeowners insurance policy, which shall include coverage for wind and hail, subject to applicable deductibles in force at that time for policyholders living in the same rating area, once they have reconstructed their home.

(4) Allstate must also advise its policyholders of the terms and conditions of this Consent Agreement through radio commercials and in ads in local newspapers.

(5) In the event of a disagreement as to reinstatement between Allstate and any cancelled policyholder, Commissioner Donelon shall render a final and non-appealable decision in the conflict, which shall be binding upon Allstate as to reinstatement.

(6) Commissioner Donelon reserves his right to consider monetary sanctions against Allstate.

"I will carefully monitor Allstate's actions throughout this process to ensure that policyholders entitled to reinstatement are fully protected," Commissioner Donelon said.

Commissioner Donelon added, "The Department of Insurance will continue to investigate all complaints as they are received. If any homeowner feels they have been improperly cancelled by Allstate, or any other insurance company, they should call the Department of Insurance at 1-800-259-5300."