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Allstate in the Hot Seat

February 4th, 2008 by Mike Vasilinda

State Senators asked probing questions today in the first day of a two day hearing that had insurance executives under oath. Allstate executives were asked why the company used a model to predict risks that generated higher profits than the model allowed by regulators. As Mike Vasilinda tells us, Senators werent pleased with what they were told.

Hear it here: Allstate in the Hot Seat

For the second time in a month, Allstate Insurance executives swore to tell the truth.

The company is on the hot seat for seeking a 42 percent rate hike when new legislation was supposed to send rates lower by a fourth. Senator Bill Posey says the math doesnt add up.

If you were charging 75 cents for this reinsurance and now you get it for 12 cents, thats 63 cents thats supposed to go back to the customer, Posey said.

Senators spent more than an hour grilling the executives over their use of an unapproved model which raised loss expectations and generated an extra 10 percent increase in premiums.

Is it your testimony that nobody on that team or yourself ever conversed that this model that were using is not approved in the state of Florida? Senator Jeff Atwater asked.

I dont recall having those conversations, Allstate Actuary Ryan Michel replied.
The committee chairman stopped just short of saying the company committee perjury when it swore it did its best to lower rates.

I am only asking the questions as to explain the documents of your company and how you went from A to Z, Atwater said.

And with every answer from the company came more questions. And as one senator put it, the answers had very little substance.

I havent seen so much bobbin and weavin since Muhammad Ali did the rope-a-dope, Posey said.

Allstate spokesman Adam Shores says the company if happy to be able to tell its story.

The hearing will continue on Tuesday.

Posted in Insurance, Legislature, State News | 2 Comments »

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