Allstate Corp. (ALL) said Monday that it wasn't renewing some of its homeowners' policies in the New York City area for fears that a major hurricane could strike in the area, leaving the insurer overexposed.

The decision drew an immediate rebuke from New York State Superintendent of Insurance Howard Mills, who said he would call Allstate and other insurers in for a fact-finding hearing on Feb. 27.

Allstate, the largest publicly traded company that insures homes and cars in the U.S., has already said it wouldn't take on new home insurance in Westchester County, Long Island and the five boroughs of New York City.

Now Allstate spokesman Michael Trevino said that his company would no longer renew a percentage of existing homeowner policies in those areas.

By law an insurer can't cancel 4 percent or more of its policies in a state each year without filing formal notice, according to Mills, and Allstate hadn't done that.

"We don't anticipate any crisis of people who can't get homeowners' insurance on Long Island," said Mills. "But if there is, we have many ways to take action."

Allstate considers itself overexposed along the southern New York shoreline, where it has a 26 percent share of the market. Throughout New York state it has an 18 percent market share.

Allstate's new policies reflect the huge losses it took in the 2005 hurricane season. Hurricane Katrina devastated New Orleans and the state of Louisiana, where the insurer had no backup coverage from reinsurance, and Hurricane Rita hit Texas.

Together the two storms cost Allstate more than $3 billion in losses.

Meteorologists anticipate that the U.S. is in a 20-year cycle when hurricanes are likely to be particularly frequent and strong, both pummeling the Gulf Coast and coming up the Atlantic. Any storm that hit the New York area would be particularly costly to insurers because of the density and price of housing there.

"There are easily storm scenarios in New York that run to tens of billions of dollars," said Robert Hartwig, chief economist of the Insurance Information Institute. "And structures on Long Island aren't as well built as new construction in Florida."

Florida saw more than $10 billion of damage from Hurricane Wilma in October.

"Allstate's facing a conundrum where it can't raise rates because state regulators won't let it, yet the rating agencies such as Standard & Poor's are telling it to keep more capital in the event of multiple catastrophes," said Hartwig. "They are taking the only outlet available."

U.S. Senator Charles Schumer, who represents New York, has criticized Allstate, saying the hurricane risk is "bogus" and demanding that the company reinstate coverage without raising premiums.

"The likelihood of a severe hurricane hitting in New York City is one in every 500 years," said Schumer.

A 1938 hurricane did hit Long Island and Massachusetts, causing hundreds of millions in damage and costing nearly a thousand lives, according to Hartwig. The wall of wall of water caused by the hurricane traveled a mile inland.