State suspends Allstate's insurance license

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Big Friggin’ News!

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State suspends Allstate’s insurance license

**TALLAHASSEE (Bay News 9) – The state of Florida has suspended Allstate’s Insurance license.

The move, which became effective Wednesday afternoon, bars the company from writing new policies in Florida.

On Tuesday, Florida Insurance Commissioner Kevin McCarty abruptly adjourned a rare two-day hearing on Allstate’s underwriting practices in Florida after three hours of sometimes heated exchanges.

The second largest property insurer in the state, Allstate had requested a 42 percent rate hike. Not only was that denied, but the insurance commission called the hearing to question how the company establishes rates.

McCarty accused the company of sending regulators a 51-page objection to the subpoenas, while also sending more than 30,000 documents that included little or nothing of value.

Allstate officials said they were apprehensive about handing over certain documents like hurricane risk models and internal memos, calling them trade secrets.

"Either you’re going to produce the documents we request or you’re not,’ said Florida Insurance Commissioner Kevin McCarty. “And if you’re not, we will use all means available under Florida law to enforce our authority over our subpoenas.”

In a statement, Allstate said it was surprised at the state’s Office of Insurance Regulation (OIR) rulings based on several months of phone conversations.

“Allstate is committed to working diligently with the Office of Insurance Regulation to create solutions and ensure there is a healthy insurance market for Florida consumers,” the statement said.

"Since receiving the subpoenas, Allstate has produced nearly 40,000 pages of information and will continue to produce responsive documents to the OIR on a rolling basis.

“We have not yet received an order and are evaluating our options. At this time, it is not clear how this action will affect Allstate or the more than 1,100 Allstate agents in Florida who are small business owners and employers.”

No date was set for the hearing to resume.

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wow!

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Fantastic ,Glad to see some one has the courage to make these insurance Companies pay attention.
…Cookie

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Hi to all,

Thats a shocker, I read of yesterdays meeting in the SP times this morning but I’m stunned that the state has suspended their license, looks like both sides are playing hard ball, none of which is good news for insurance in Florida.

Regards

Gerry

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A 42% increase over last year is crazy.

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Have you guys adjusted ***your ***rates recently?

Or is this just for the big guns?

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Guess my rates will go up again. They raised my home owners about 25% a few months ago on the grounds that do to local building construction cost it would take that much more to replace mine. Which I know my area has not went up that much.

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Odd…since the media is reporting a 15% reduction in property values with no end currently in sight.:roll:

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Not really Jim, value and replacement cost are not the same thing.

Regards

Gerry

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That’s what I thought. In my opinion they’re trying to recuperate from their coastal losses.
Here is a quote how they determine this, “The property insurance adjustment condition applies using the Boeckh Publications Building Cost Index developed by The American Appraisal Association, Inc.” :o

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Whilst I have no doubt that the insurance industry warms the books over when reporting, it is widely held that the cost to the insurance comunity of hurricane Andrew (1992) $28 billion, wiped out the gross revenues from insurance premiums in the state generated in the previous 50 years, and that the 2004/2005 losses also wiped out the income generated between 1992 and 2005.

I genuinely don’t believe the insurers are getting rich on FL real estate

Agreed, but as we all know the costs of building materials and getting them to site has exceeded inflation by a wide margin over the last 5 years.

Regards

Gerry

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It is not just coastal losses, replacement costs verses square foot values are much higher in homes that were damaged and are expected to be repaired than in homes that suffer total loss. And that is the norm, most houses are not total losses resulting in reconstruction costs that are normally much higher than site built square foot building costs.

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You are both correct, material and wages have increased. Both do to the new homes being built and the repairing of many damaged homes from recent hurricanes, fires and other catastrophes.

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Lets see, They won’t let the insurance companies pull out, but if they make a stink, they get suspended. hummm

Thats like the bad kid in shcool that did not want to be there so he screws up and they suspend him, never did understand that.:smiley:

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and Citizens continues to grow.

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Yes, the next federal bail-out in the making, in the end the risk must be equally spread if insurance is going to work. Look for federal catastrophe insurance modeled after federal flood insurance plan, that way all states will equally share the burden.

The other thing I could see happening is mortgage companies being required secure & pay to insure the mortgage themselves as opposed to pushing that burden off to the borrower as they will be able to aquire that insurance at a much reduced rate.

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At whose expense?

this state is effectively self insuring, risky!!

Regards

Gerry

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I hope you are wrong but I fear you are right.
Any substantial “bail out” by the Fed will only prolong the agony of a recession.

Do you really expect them to reduce their profit margins?
Any mortgage insurance will be passed along to the borrower most likely by high interest rates.

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70 percent of forclosures are by people who mis-stated their income.

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Who knows it could happen, but if the lenders were responsible for their own insurance no doubt ways & means would be found to reduce costs, but as long as the borrower is the only one responsible to carry the burden of insurance no new thinking will be brought to this problem.