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Allstate Back on Hotseat

February 19th, 2008 by flanews

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

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.

Ed Domansky of the Office of Insurance Regulation say 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,” he added.

At a half day hearing, lawmakers, including  Senator Bill Posey 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.” Posey asked rhetorically.

The answer The companies bought extra insurance instead.  Reinsurance expert Paul Walther wouldn’t discount the possibility of collusion among reinsurers.  “Who knows whether there are rebates out there and collusions. There are issues having to do with the major insurance brokering arms.”

Experts also testified rates went up because of newly developed short term models. State Senator Steve Geller of Hallendale Beach is 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!”

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.

Posted in Business, Hurricane Season, Insurance, Legislature, Politics, Property Taxes, State Budget, State News | No Comments »

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