Consumer advocate says Allstate should back down
Yesterday Allstate Insurance filed an appeal after the state of Insurance Regulation expanded its freeze on the company from doing any future business in the state until it complies with a state investigation into how it sets homeownersâ insurance rates.
Insurance Commissioner Kevin McCarty on Wednesday announced that Florida would ban Allstate from writing any new car insurance policies, after it has failed to comply with subpoenas. The subpoenas were issued in connection with hearings that were to focus on Allstate's request for up to 42 percent in rate increases for property insurance.
The state is looking into why Allstate wants a rate increase when companies are supposed to be lowering prices this year.
Robert Hunter is the director of insurance for the Consumer Federation of America. He says whatâs really bad about the current situation is that insurance companies like Allstate, say they need the extreme rate hikes after the losses they took in 2004 and 2005. These companies said the same thing after Hurricane Andrew devasted South Florida in 1992, Hunter said.
In a statement Wednesday, Allstate said it has already provided nearly 40,000 pages of information to the state and would continue to produce "responsive documents."
But what Commissioner McCarty was to get access to is a report prepared by New York consultant McKinsey & Co. It allegedly recommended that the company use a program that promised to cut bodily injury claims by up to 20 percent by reducing payments to policyholders "without adequately examining the validity of each individual claim."
Allstate does not want to disclose the contents of the McKinsey report â thatâs why it paid a Missouri court contempt finds of almost $2.5-million rather than release it.
The Consumer Federation of America released a report last week that said that insurance companies overcharged customers for home and car coverage $870 per household over the last four years.
According to the CFA, the insurance industry raked in $65-billion in profits last year. Even with the deadly hurricanes in 2004 and 2005, the industry then made record profits, of $40 billion and $48 billion dollars, respectively.
When he ran for governor in 2006, Charlie Crist said that one way he would put pressure on the insurance companies would be to prohibit them from selling auto insurance policies.
Some insurance analysts criticized Crist as being naive, but in fact, in 2006, Allstate wrote $1.9-billion worth of auto premiums, an amount that seemingly would be difficult for the insurance giant to dismiss.comments powered by Disqus