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Allstate Back in Hot Seat

February 19th, 2008 by flanews

Allstate Insurance is again on the hot seat for failing to give state regulators documents, for mislabeling the documents it has given the state, and for its CEO signing off on a rate request he did not fully read. As Mike Vasilinda tells us, the company again faces the loss of its certificate to sell insurance.

Hear it here: Allstate Back in Hot Seat

State regulators are taking an administrative route to suspend Allstate’s license to sell new business. The charges come as some agents are reporting a 50 percent drop in the sales of new policies after the state sought to suspends the company’s certificate in January. Regulators said the company still hasn’t given them everything they are seeking.

“But in addition the complaint also states that they falsely indicated
that the documents were trade secret,” said Ed Domansky, a spokesperson for Department of Insurance Regulation.
At a half day hearing, lawmakers continued to drill industry executives on why rates didn’t go down as much as expected.

“They want to cancel everybody that’s a risk and overcharge everybody that’s not,” said Senator Bill Posey.

The companies bought extra insurance instead.

“Who knows whether there are rebates out there and collusions. There are issues having to do with the major insurance brokering arms,” said Paul Walther, a reinsurance expert.

Experts also testified rates went up because of newly developed short term models. Lawmakers are upset because short term models are not allowed to be used to set rates.

“And then they say, well we produced the short term model but we have no idea how people use it, we’re not responsible if they use it improperly, which I had concerns with. Oh you mean that they’re using our models to set rates? We’re shocked,” said Senator Steve Geller.

One outcome of the hearings is that lawmakers are promising legislation this spring, clarifying which hurricane prediction models can be used and which can’t. After four days of hearings, state lawmakers said they have barely scratched the surface in understanding why and how some insurers have avoided lowering rates. They expect more to hold more hearings during the regular legislative session beginning next month.

Posted in Insurance, State News | 1 Comment »

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