In an order sent to Allstate, the commissioner said the company failed to justify its rate request and has filed requests for high increases since Katrina in 2005, possibly as a way to price itself out of the Mississippi market. “The upward spiral of rate increase requests since 2005 is indicative of Allstate’s move toward excessive rates in Mississippi,” the Insurance Department order denying the request said. “This commissioner cannot in good conscience approve the rate increase request in light of this information.”
As promised, state Insurance Commissioner Mike Chaney has rejected Allstate Property and Casualty Insurance Co.’s request for a statewide rate hike of 44 percent…Allstate requested the rate hike in March, after Chaney had rejected the company’s request for a 65 percent increase…
- As previously reported on SLABBED,Allstate “had at least two law firms working on its rate filing, including a Jackson firm that employs Mississippi’s former top regulators, former Insurance Commissioner George Dale and Deputy Commissioner Lee Harrell”.
Rate filings are complicated…[and]… are based partially on catastrophic losses projected through hurricane modeling. In recent years, insurance companies have projected greater losses based on predictions of heightened hurricane activity. Rate requests are based partially on catastrophic losses projected through hurricane modeling. In recent years, insurance companies have projected greater losses based on predictions of heightened hurricane activity.
However, short-term models in use this decade have overestimated hurricane losses, according to an analysis completed by Karen Clark & Co., independent experts on catastrophic risk.
“Three of the past four years have had minimal insured property loss from the Atlantic tropical cyclones,” the report said, “well below both the long term average and the (much higher) near term projections. It is becoming clear that a five-year period is simply too short a time horizon for hurricane loss estimation.”
The report also concluded there is “no clear basis for concluding that we are currently in a period where losses associated with hurricanes should be expected to be well above the long-term average.”Allstate has 30 days to decide whether to ask for a public hearing on its rate request. The hearing officer, who would be Chaney or someone he appointed, would then decide if the increase should be granted. Denials can then be appealed to court.
While not as encouraging as the first two points, the Sun Herald’s story had one last eye-catching detail:
“The Mississippi Insurance Department hires outside experts to review rate requests and it also received some help in reviewing Allstate’s request from the Louisiana Insurance Department.” (emphasis added)
“Allstate spokeswoman April Eaton said the company is “disappointed” by the Insurance Department’s decision. “We believe our rate filing is justified because of the loss we are experiencing, due to the risk present in the state and the increase in claims,” Eaton said. “We are seeing an increased frequency in losses from home fires, home burglaries, water damage and liability claims.” She said the company must remain in a strong financial position for customers…Eaton said Allstate will consider options that allow the company to continue serving the Mississippi market and also charge an adequate rate.”