
The State of Florida has suspended Allstate’s license after the insurer refused to hand over documents subpoenaed by state insurance regulators. The documents had been requested after Allstate requested rate increases as high as 41%.
The suspension follows a heated hearing earlier this week between Allstate and the regulators. What was supposed to be a two-day hearing before Florida insurance regulators questioning Allstate's baffling request for double-digit premium rate increases ended after just two hours when it became clear that Allstate was withholding documents requested by the regulators.
Angry regulators accused stonewalling and had threatened sanctions, including the suspension of Allstate's licenses to operate four of its Florida companies, in light of Allstate's willful refusal to turn over the requested documents. Regulators grilled Allstate's representatives and lawyers but received mostly evasive, empty answers when trying to ferret out Allstate's relationships with insurance-rating and risk-monitoring companies and insurance trade associations.
Allstate has requested rate hikes as high and 41.9%, but when regulators subpoenaed the documents supporting such an enormous increase, Allstate responded with a 51-page objection, claiming that the requested documents were "irrelevant."
In light of the regulators' reactions, Allstate now says it intends to drop its requested rate increase.
That speaks volumes about what Allstate is trying to hide. It would rather give up tens of millions of dollars (or more) in additional rates, rather than divulge its internal documents.
Allstate's situation highlights what the plaintiffs' bar has warned about for years. Insurance companies are all about profits, and not about customers. After complaining about their supposedly desperate financial situation following the 2004-2006 hurricane seasons, the insurers and their lobbyists convinced a special session of the Florida Legislature to enact new insurance laws designed to give relief to insurers.
In exchange, the insurers were supposed to pass on the savings to consumers through significantly lower homeowners' premiums. Instead, most insurers lowered their rates very little or not at all, and some, including Allstate, have asked for more money. As a result of the insurers' broken promises, Florida Gov. Charlie Crist is exploring a class action lawsuit against insurers to force them to abide by the law.
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