Jan 15, 2008 6:25 pm US/Eastern
Allstate Called Into Question On Its Rates
TALLAHASSEE (CBS4) ―
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It was a year ago this month that Florida legislators worked on legislation to get property insurance rates lowered.
CBS
Florida insurance regulators abruptly ended a hearing with Allstate executives Tuesday, angered that the
company and its attorneys failed to fully comply with a subpoena demanding information on property coverage rates.
The hearing was scheduled to last two days but state officials cut it short after just two hours during which company officials and lawyers were pressed by regulators about why they hadn't supplied all the documents the state wants, and whether they are following a new law meant to lower premiums.
Insurance Commissioner Kevin McCarty said he planned to bring the Illinois-based insurance giant back later this year when it has answers to the state's questions.
McCarty said Allstate faces severe sanctions, including the possibility of losing its license to operate its four Florida companies if it fails to comply again.
"We will take appropriate enforcement actions," McCarty said. "Their certificates are certainly under review."
Allstate's response to some requests as "irrelevant" was "a slap in the face to the regulatory agency," McCarty said.
Allstate's legal team and company executives, who were under oath, largely avoided questions about whether it has complied with a Florida law passed last year to give consumers premium relief.
Regulators were looking for information on Allstate's relationships with insurance rating and risk monitoring companies and insurance trade associations.
The panel focused on a new hurricane model that Allstate began using to calculate its rates after Florida lawmakers passed new insurance legislation in January 2007. Under the new model, rates went up, although the company said that wasn't its intent. That model wasn't approved by the state.
At one point before taking a 10-minute break halfway through the testy testimony, McCarty laughed aloud at the response to one of the committee's questions.
"Clearly they're frustrated with the situation," Allstate spokesman Adam Shores said. "And we're frustrated too. We want to have an open and active dialogue to work this thing out."
Allstate Floridian Indemnity and Allstate Florida Insurance Co. have requested rate increases of 28.3 percent and 41.9 percent respectively. Encompass Floridian Indemnity requested a 38.4 percent increase, and Encompass Floridian Insurance Company requested a 39.7 percent increase.
While Allstate told McCarty it planned to drop its request for double-digit rate increases, that did little to assuage him or Sen. Jeff Atwater, R-North Palm Beach. Atwater is chairman of a newly created Senate panel investigating why so few companies have complied with the insurance law.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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