Allstate Defends Property Insurance Rate Proposal to Lawmakers

By | February 6, 2008

  • February 6, 2008 at 1:32 am
    Dick says:
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    If I’ve heard it once I’ve heard it a hundred times. I know they paid out more than they took in in 2004 and 2005. What has happened since then? Has anyone ever heard about the experience for 2006 and 2007?

  • February 6, 2008 at 1:39 am
    Midwest says:
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    Dick,

    There were 4 tornados that went thru FL on 12/25/06 and also multiple tornados in Feb ’07

  • February 6, 2008 at 1:57 am
    Florida market watcher says:
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    If the OIR and the legislature were truly interested in keeping rates low for Florida residents (as opposed to playing politics), they would do a better job of monitoring for insolvencies and of watching Citizens and the FHCF. But for Poe, shortfalls in Citizens’ accounts, etc., Florida residents would be paying more than 10% less than they are paying now. The OIR and the vast bureaucratic mess that makes up the state’s insurance administration (SBA, FHCF, FIGA, etc.) should get their own houses in order before pointing fingers at private market carriers who rate based on risk and not based on getting votes.

  • February 6, 2008 at 2:39 am
    acm says:
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    I work for a major carrier that writes in Florida and we’re getting killed there and our rate increase request was flat denied. It’s a terrible insurance climate.

  • February 6, 2008 at 3:22 am
    Dick says:
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    Allstate Floridian Chairman and CEO Joe Richardson said his company paid out about $1 billion more in claims in those two years than it took in premiums.

    That is the most irrelivant statement ever!
    What about all the years they have made a profit?

  • February 6, 2008 at 3:48 am
    tb says:
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    It only takes one year of hurricanes to wipe out ten years of profits. Most companies have been running a deficit over the long haul in Florida. If you take all of the years of profits and all of the years of losses and total them out over the last twenty years, I don’t think you will find many companies on the positive side of the equation.

  • February 6, 2008 at 3:54 am
    Dick says:
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    Then why are they still trying to ANY business down there? Do they like losing money?

  • February 6, 2008 at 5:08 am
    Superjuster says:
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    It would seem to me if the profit potential was so great in Florida there would be dozens more companies wanting to write coverage there.

  • February 6, 2008 at 5:23 am
    Good Hands says:
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    The years Allstate made money in Florida? Katrina wiped out all the historical home insurance profits for Allstate in seven states for all of the years we did business in those states. All of it in one storm. Add another billion or so in Florida alone and we have what they call a rating situation.
    You are right, why do we keep trying? Change the name to Moststates?

  • February 7, 2008 at 7:04 am
    TEXAN says:
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    The Government idea that Rachael sugguested is actually an idea promoted by Allstate right now. They cannot write policies without wind coverage because it is not allowed by the OIR. In Texas insurance companies do have that option in some counties and customers get a seperate policy for Wind and Hurricane coverage through the Texas Wind Pool.

    What Allstate suggested after hurricane Katrina and the many other storms that year is to have a National Program similar to the current National Flood Program.

  • February 7, 2008 at 7:15 am
    TEXAN says:
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    Officers that run companies have a responsibility to make profits. Investors demand it and employees count on it. The profits they make compare to the cost of the stock purchase price is minimal each year for insurance investors.

    The thousands of employees that rely on their ledership to be profitable so they can have careers and provide for their families are the same ones that spend dollars in your community and drive our economy!

    The claims information you have evolves on an annual basis. For at least the past 10 years, insurance companies, especially Allstate’s which is a leader in the industry, have determined that claims is key to acquiring and keeping customers.

    Companies, including Allstate, have invested millions in their constantly evolving processes that make any process used in the past obsolete.

    Politicians and especially the OIR both already know this. Their motives are insincere and sidetrack real solutions at the expense of Floridians.

  • February 7, 2008 at 8:44 am
    Anonymous says:
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    netting Allstate billions of dollars in the process.

  • February 7, 2008 at 8:52 am
    GT says:
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    ALLSTATE IS A NATIONAL COMPANY – NOT JUST A COMPANY DOING BUSINESS IN FLORIDA. On the Allstate website they tout, “Our year of record profits in 2006 continues our tradition of protecting shareholder capital while earning superior results. What lies behind these profits? Reduce our exposure to mega-catastrophes!” “To minimize our exposure we set up expanded market programs that allowed Allstate agencies to help customers obtain insurance from other companies.” “We must be successful in these efforts.” THE BEAT GOES ON – PROFITS OVER PEOPLE is the main emphasis at the “Big A.”

  • February 7, 2008 at 8:58 am
    Anonymous says:
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    Allstate always floats to the top. We were above the average investment (for other homeowners insurers),” Allstate actuary Steven Armstrong said during a hearing before an administrative law judge at the Department of Insurance’s offices in downtown San Francisco.

    Allstate officials did not offer specifics on where the company invested its funds.

    Consumer advocates have challenged Allstate’s proposal and urged regulators to slash premiums by 30 percent, saving policyholders an average of $326 a year on their annual bills. Critics argue the insurer is flush with money, earning $5 billion in profits in 2006 and buying back $3 billion worth of company stock during the first nine months of 2007.

    Allstate, the state’s No. 3 homeowner insurer, is bucking moves .

  • February 7, 2008 at 9:08 am
    Anonymous says:
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    Standard auto property damage frequencies increased 2.8 percent while bodily injury gross claim frequencies decreased 2.8 percent compared to the fourth quarter of 2006. Auto property damage and bodily injury paid severities increased 2.2 percent and 9.3 percent, respectively. The standard auto loss ratio increased 5.3 points compared to the fourth quarter of 2006 to 70.3 in the fourth quarter of 2007.

    For the year, revenues reached $36.8 billion and net income of $4.6 billion ($7.77 per diluted share), which the company said was the second highest in its history.

  • February 7, 2008 at 9:09 am
    Dustin says:
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    GT,

    Do you not realize that when the government will not allow you to set an actuarily sound rate, it is time to leave? The only bad risk is an underpriced risk, and right now the Florida govt is doing just that. Minimizing rate increases for political gain, while making the state a “bad risk.” It is not necessarily that their are hurricans in Florida. As others have noted, catastrophes happen everywhere. The problem is when you cannot adequately rate the risk because of political grandstanding. How often we forget that insurance companies are here to make a profit!

  • February 7, 2008 at 9:15 am
    violating both the spirit and says:
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    Insurance Rate Increases, Industry Ties
    By Brian H. Kern
    October 16, 2007

    Send Feedback E-mail this Article Print this Article Article Reprints
    Florida officials have subpoenaed Allstate Insurance and its subsidiaries to get the insurer to explain why it is not lowering homeowners insurance rates in the state and to defend its dealings with the industry’s risk modeling and rating organizations.

    The subpoenas direct the Allstate companies to appear at a January public hearing in Tallahassee before the Office of Insurance Regulation to testify regarding the companies’ reinsurance costs and their relationships to risk modeling companies, insurance rating organizations or insurance trade associations.

    Gov. Charlie Crist and Insurance Commissioner Kevin McCarty announced the action at a news conference at which they questioned whether Allstate was living up to “the spirit and the letter” of a state law that requires insurers to pass along savings on reinsurance to the public.

    “The legislation enacted in January was very specific about its requirement that insurers reduce the rates they are charging for homeowners insurance,” said McCarty. “We are continuing to investigate those companies that appear to be ignoring the intent of the legislature in its efforts to reduce premiums to consumers, and we want to hear the reasons behind those companies’ actions.”

    The subpoenas have been issued to Allstate Floridian Indemnity Co., Allstate Floridian Insurance Co., Allstate Fire and Casualty Insurance Co., Allstate Indemnity Co., Allstate Insurance Co., Allstate Property & Casualty Insurance Co., Encompass Floridian Indemnity Co., Encompass Floridian Insurance Co., Encompass Indemnity Co., and Encompass Insurance Co. of America.

    The subpoenaed companies combined comprised 7.9 percent of Florida’s residential property market as of June 30. They write more than 394,000 policies in the state.

    Allstate Floridian Indemnity and Allstate Florida Insurance Co. are requesting rate increases of 28.3 percent and 41.9 percent respectively. Encompass Floridian Indemnity is requesting a 38.4 percent increase, and Encompass Floridian Insurance Co., is requesting a 39.7 percent increase, according to state officials.

    Gov. Crist called the rate increase requests “outrageous” and vowed that the state would continue to press insurers for savings.

    “Many Florida homeowners have been disappointed that property insurance rates have not dropped more, and I, too, am disappointed,” Crist said. “We have significant reason to believe that some insurers are violating both the spirit and the letter of the law passed earlier this year and may not be passing savings along to the customer. Instead, we have seen outrageous rate hike requests

  • February 7, 2008 at 9:18 am
    Anonymous says:
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    said McCarty. “We are continuing to investigate those companies that appear to be ignoring the intent of the legislature in its efforts to reduce premiums to consumers, and we want to hear the reasons behind those companies’ actions.”

  • February 7, 2008 at 10:24 am
    Rachel says:
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    Have policies that dont cover wind. Then increase property taxes and let the state take care of covering wind damage.

  • February 7, 2008 at 11:14 am
    Good Hands says:
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    GT, Ouch! I do business in the Pacific Northwest–should my competitive position be inferior to regional companies who have no wind exposure on the other side of the country? Florida problems have to be solved in Florida and I hope to heaven that my company DOES make money nationwide year after year. Insurance companies are not charities; not Big A, SF, N, G, or even Little E.

  • February 7, 2008 at 1:20 am
    caveat emptor says:
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    Absolutely GT – you got it. Allstate is a business (see SprawlMart et al for an indication of what a business is) they are in business to make a profit. They are not there to provide you and yours peace of mind – they are there to provide themselves a piece of the action. Do you walk down to the local coffee shop and ask why your coffee costs more than 3 bucks? No, because you know it’s a business that is out for profit. Insurance is a business not a charitable organization. Regulating rates will only force them higher as more and more businesses choose other states to write in where the rates are less artificially deflated. I’m sorry you’re so angry on this issue but the reality is exactly what you said profits before people. Period. Plain, simple, English.

  • February 7, 2008 at 2:06 am
    Vlad says:
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    … can be found at this web address:

    http://www.flains.org/content/view/1262/38/

    At the very bottom click on “Fl Hurricane Insurance Facts, Jan. 2008”

    The most straight forward and reasoned document on the Florida situation to date.

  • February 7, 2008 at 2:13 am
    Mable says:
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    Rachel had a good idea – Just give everyone free insurance from the state and then raise property taxes.

    Problem solved.

  • February 7, 2008 at 2:22 am
    Dustin says:
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    Do you really think making a logical argument, presenting facts, and generally being correct will cause people here to agree with you? Surely you underestimate the hatred of our industry present here. Now, off with your numbers. They can say whatever you want them to say…..(please note sarcasm in previous statement)

  • February 7, 2008 at 3:49 am
    low-ball claims offers says:
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    TAMPA – Behind the fight between Florida’s insurance commissioner and Allstate Insurance Co. is a mystery that could have come from a John Grisham novel.

    Secret Allstate documents – known as the McKinsey documents – allegedly show how the insurance giant intentionally has made low-ball claims offers to its customers for years, netting Allstate billions of dollars in the process.

  • February 7, 2008 at 3:52 am
    Anonymous says:
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    Overall, Allstate tried to standardize the claims process, by using computer models that offered low-ball estimates of the value of a person’s claim, Berardinelli said

  • February 7, 2008 at 4:05 am
    Good Hands says:
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    C’mon guys, the McKinsey documents don’t have anything to do with proerty insurance or hurricanes, they were the work product of a consultant on auto med claims. They are, however, part of the everything-including-last-Sunday’s-newspaper subpoena from the Florida DOI.
    Stay on topic!

  • February 8, 2008 at 11:55 am
    Vlad says:
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    You must be psychic. Could you help me pick stocks over the next twelve months?

    Thanks, your commrade, Vlad.

  • February 8, 2008 at 1:32 am
    D says:
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    So Mr. no backbone no name, you want to copy and paste articles? How does this one grab you?

    Home > Insurance Blog > Archives > 2008 > February > 01 > Entry

    McCarty Gives Allstate A Little Love
    By Randy Diamond | Friday, February 1, 2008, 07:42 PM

    Could the state’s legal battle with Allstate be coming to a settlement outside the courtroom before an appeals court rules on whether Florida officials have the power to ban the insurer from writing new policies?

    Insurance Commissioner Kevin McCarty in the last few weeks has not missed a chance to slam the insurer for not turning over all subpoenaed documents regarding the company’s pricing, underwriting and business practices.

    But McCarty was a bit more cordial towards Allstate in a statement on Thursday.

    “Although my office has not yet received all the documents requested from Allstate, I remain confident that everything in our subpoenas will be produced in a timely fashion and that we will continue to work together to an amicable resolution of this matter,” he said.

    McCarty said the insurer had produced 25,000 documents within a week of his January 17 order suspending Allstate from writing new business.

    Of course, McCarty’s statement came after an appeal panel sided with Allstate and refused to reintstate for now the state’s ban on the writing of new policies by the insurer.

    The court has not yet ruled on the overall issue of whether the state had overstepped its authority in suspending Allstate’s ability to write new business but so far the tea leaves haven’t been in Florida’s favor.

    So a quick settlement now could save McCarty the embarrassment of a court ruling that might conclude that he and regulators had abused their power.

    ……..he and regulators had abused their power.

    ….just in case you didn’t catch it the first time.

  • February 11, 2008 at 7:37 am
    Anonymous says:
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    Florida Subpoenas Allstate Over Home Insurance Rate Increases, Industry Ties
    National News • October 16, 2007
    Florida officials have subpoenaed Allstate Insurance and its subsidiaries to get the insurer to explain why it is not lowering homeowners insurance rates in the state and to defend its dealings …

  • February 11, 2008 at 8:00 am
    hOPE says:
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    Several lawmakers have expressed frustration that the 2007 law didn’t result in lower rates for all consumers, and many said they felt misled by insurance company representatives, although industry officials have said that they never promised lower rates from what the Legislature passed.

    Many lawmakers clearly disagree

  • February 12, 2008 at 9:58 am
    No big says:
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    The rate reduction comes on the heels of a 7 percent State Farm rate decrease enacted earlier this year. The additional reduction will result in approximately $23 million in savings to their policyholders, the OIR said.

    In addition, State Farm has agreed to change its method for non-renewing policies in coastal zones in Florida. As was announced in July, the company still plans to non-renew up to 50,000 policies of policyholders with properties along the coast; however, non-renewals will not be based upon tying to other insurance products with the company.

    State Farm also has agreed to refund excess surcharges. The excess amount, $23 million, plus 5 percent simple interest, will be refunded to State Farm policyholders beginning in six months.

    “State Farm has reduced its rates and has agreed to stop business practices that the Office found objectionable,” said Insurance Commissioner Kevin McCarty. “Our governor and our legislature required this by law, so I am happy to see that State Farm has reached this agreement for the benefit of its policyholders.”

    As a result of a comprehensive investigation by the Office of the Attorney General, with the assistance of the OIR, State Farm will begin a program of automatically notifying its auto policyholders that are eligible to transfer to the less-costly State Farm Mutual Company

  • February 12, 2008 at 10:02 am
    up to 50,000 policies says:
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    State Farm has agreed to change its method for non-renewing policies in coastal zones in Florida. As was announced in July, the company still plans to non-renew up to 50,000 policies of policyholders with properties along the coast; however, non-renewals will not be based upon tying to other insurance products with the company.



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