Here is the text of the press release just issued by the Florida Office of Insurance Regulation.
Wednesday, January 16, 2008
TALLAHASSEE, Fla. - Florida Insurance Commissioner Kevin McCarty today announced that he is suspending the certificate of authority of Allstate Companies to write new insurance in Florida until they fully comply with the subpoenas served Oct. 16 by the Office of Insurance Regulation (Office).
Today's decision by the commissioner follows Tuesday's action when he abruptly halted the scheduled two-day hearing into the Allstate Companies’ reinsurance program, their relationships with risk modeling companies, insurance rating organizations and insurance trade associations.
"In view of Allstate's ongoing, blatant disregard of our subpoenas, I have little choice but to take an action that will send a clear message about how seriously I am taking this issue," said Commissioner McCarty. "Suspending their certificate of authority to write new business in our state should make my point.
"If Allstate is willing to pay $25,000 per day in fines to a Missouri court for its ongoing failure to provide similar documents, it's obvious to me that it will take more than a monetary sanction to get them to comply with our subpoenas."
Allstate was to have provided all appropriate company documents related to the above topics at or before Tuesday’s hearing, but failed to do so. Instead, the Office received 51 pages of objections to the subpoenas.
The suspension applies to Allstate Insurance Co., Allstate Indemnity Co. and Allstate Property and Casualty Co., and it only suspends the companies from writing new business in Florida.
Existing policyholders will not be affected. Allstate must continue to service them and the companies must make all required statutory filings including, but not limited to, audited annual financial statements, quarterly financial statements and rate filings.
"The duration of the suspension is up to them," added McCarty. "It will be lifted when I am satisfied that we have received each and every document we need to properly investigate the important issues before us.
"It continues to trouble me that Allstate has not complied with our subpoenas and is not willing to explain to us their relationships with rating agencies, modeling companies and trade groups and how these relationships might have influenced the huge rate increases they have requested. This clearly cannot be in the best interests of Florida consumers."
This is the first time the Office has suspended a company for failure to "freely" provide documents as required by Florida law.
A copy of the subpoena is available to review.
Allstate Floridian Indemnity and Allstate Floridian Insurance Company 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.
About the Florida Office of Insurance RegulationThe Florida Office of Insurance Regulation (Office) has primary responsibility for regulation, compliance and enforcement of statutes related to the business of insurance and the monitoring of industry markets. Business units within the Office are organized based on regulatory expertise and include the areas of life and health, property and casualty, specialty lines and other regulated insurance entities. It is within the Office that the mission of public protection is implemented through regulatory oversight of insurance company solvency, policy forms and rates, market conduct performance and new company entrants to the Florida market.
Wednesday, January 16, 2008
Florida Insurance Commissioner Suspends Allstate Insurance Co.
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4 comments:
Well it seems strange to me. The two sides are arguing over what an appropriate algorithm is to use to assess hurricane damage. And (more relevant) what reinsurance is available to limit All States liability.
Well any algorithm you came up with would be nonsense. The swing in potential disaster scenarios from worse then Katrina to nothing happening at all just don't fit on a bell curve.
So then you get into the issue of reinsurance. Well the State of Florida can go out on the market and buy reinsurance (that is essentially what NC does through a private-public entity). So they should have pretty good idea of how much can be had and at what cost.
So why the public browbeating? If you don't like their numbers tell them: no. And then let them come to you with their numbers. No offense to Missouri, but Florida is a world of a different sized market. Mississippi really does have to worry about the big guns pulling out (though they really wouldn't want to). But Florida? If you take the two most hurricane prone states: Florida, and North Carolina, and then throw in California's earth quakes (which adjusting for inflation still compare with the very largest of hurricanes), you have just over 1/6th of the Country's population and probably a larger proportion of its wealth.
Actually them boys in Florida wanted Allstate to justify their double digit price increases on top of double digit price increases. As far as reinsurance goes pardner Allstate has a subsidiary based in the Cayman Islands that issues Cat Bonds and other sidecar deals that aren't transparent and could be shams like the General Re deals.
They ignore lawful subpoenas and think they are above the law and that's why they got their asses kicked today. Rumor is Texas is gonna be next to kick them greedy crooks in the ass.
They were not increases but requests for increases. And all you have to do is say "no."
And if the re-insurance is a scam?
General Re was (allegedly) tax evasion, not an attempt to minimize their insurance stop-losses. State governments need to buy reinsurance. A lot of States have various wind pool policies, etc. It is not as if they are locked out of the reinsurance market and have no idea what the costs are.
I am sure All State's objections were toward the intrusiveness of the requests and the public nature of the disclosure.
You may want to check that General Re thing again pardner. Also the Office of Insurance Regulation has a duty to the citizens that insurance premiums charged are fair and that responsibility goes way beyond just saying no. IN fact since Florida took on th worst risk, premium redution were mandated by law. Why is Allstate the only one who didn't cut their price? Even State Farm got religion.
What justification can you give for ignoring a lawful subpoena?
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