The action came in the wake of the company's $3 billion third-quarter losses stemming from Hurricanes Katrina and Rita. The company has also announced a major shifting of risk to reinsurance in the aftermath of the losses.

Weather experts cited by the Insurance Information Institute said in 1938 Long Island experienced a Category 3 hurricane with winds exceeding 110 mph that left 50 dead. Experts said the probability of another storm of that magnitude occurring in the area is every 50 to 75 years.

New York Insurance Department spokesman Wayne Kotter said he was confident Allstate's action would not create any scarcity of coverage and that other carriers would be able to pick up any slack created by the insurer's decision.

A bill filed last week in the New York State Legislature by a Long Island lawmaker would establish the kind of state catastrophe fund similar to the program Allstate has been promoting on a national level for the past several months.

New York Superintendent of Insurance Howard Mills said the plan has run into some initial resistance as something of benefit to only one area of the state.

Mr. Pozzi said his company has been supporting the effort. “But we have to do something now to make sure we can meet the obligations of our policyholders,” he said.