Florida Insurance Commissioner Suspends Allstate Insurance Co.

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.

Allstate facing Florida Sanctions: “The Dance is Over”

Well folks, here in Mississippi our politicians kowtow to crooks in Gucci suits and let State Farm pull out of the homeowners market yet continue their lucrative business lines in Auto Insurance. The difference in Florida is huge as the GOP leadership down there must not be on the insurance payroll. In fact them boys actually put the interest of the people ahead of the big campaign contributions big insurance gives it’s faithful waterboys. For Allstate today is the day of reckoning over Tallahassee way and the betting money is them crooks are gonna be shown the door, just like we should have done State Farm after they pulled out of the homeowners market. (Edited by Sop – This problem with our politicians transcends political party here in Mississippi.)

State insurance regulators cut short a two-day public hearing when Allstate executives failed to provide detailed answers to their inquires and failed to produce all subpoenaed documents.

BY BEATRICE E. GARCIA
[email protected]

TALLAHASSEE —

There was some sizzle, but Florida insurance regulators cut short a two-day public grilling of Allstate company officials when they failed to provide specific documents and answers.

Frustration was high for the regulators since Allstate Floridian and several sister companies had three months to comply with subpoenas for documents and prepare for Tuesday’s hearing.

”To say we have come with a contrite heart and say some day in the future we’ll negotiate simply isn’t satisfactory,” said Insurance Commissioner Kevin McCarty, who called off the hearing after just two hours.

McCarty noted the insurer did have time to file a 51-page objection to the subpoena issued by the Office of Insurance Regulation.

Steve Parton, OIR’s general counsel, said Allstate’s objection asserted that most of the 59 areas where the agency sought documents and information were considered trade secrets by the company and thus couldn’t be turned over to regulators.

During the hearing, George Grawe, Allstate Floridian’s general counsel, complained repeatedly that OIR’s subpoena was “breathtakingingly broad.”

McCarty said many of the documents provided by Allstate already were public because they had been included in rate filings.

Gov. Charlie Crist, who has made lowering insurance rates one of his mantras in the past year, was taken aback by Allstate’s behavior at the hearing.

”I find it stunningly arrogant and I can’t believe they would actually do that and if there’s anything we can do from the governor’s office that can help . . . we stand at the ready to do,” Crist said.

Regulators and lawmakers have been eager to question Allstate because they want to know why the company failed to comply with a new insurance law passed last year.

That bill expanded the Florida Hurricane Catastrophe Fund to give insurers access to cheaper back-up insurance, even though the state would be shouldering big losses if another massive hurricane hits the state. Then, insurance companies were to apply the savings to lower rates.

Allstate initially indicated it would drop rates. But last fall, the company filed for a massive rate hike averaging nearly 42 percent.

”This dance is over,” said State Sen. Jeff Atwater, R-North Palm Beach, who sat through the hearing Tuesday morning and was clearly disturbed by Allstate’s refusal to provide detailed answers to just about every question posed by OIR.

Both McCarty and Atwater asked if Allstate’s intent was to limit the scope of OIR’s investigation by selectively producing documents and the witnesses it brought to the hearing.

During Tuesday’s hearing, Grawe pointed out that Allstate provided OIR with 30,000 pages of documentation so far and would continue turning over documents. But neither Grawe nor the two other company officials and its outside attorney would answer questions from the OIR panel on how Allstate decided which documents to turn over and which ones to withhold.

”Consumers are going to get relief and they will also get justice,” Atwater added. The senator will be chairing a joint Senate committee that will also investigate why many insurers haven’t complied with the new law and lower their rates.

Tuesday’s unprecedented inquiry was meant to examine Allstate’s reinsurance program and how it deals with agencies that rate its financial strength and the companies that have developed sophisticated computer models to help gauge exposure to future losses.

Though the OIR hearing was postponed for now, the heat on Allstate — and the industry — hasn’t been turned off.

McCarty said he will call Allstate back to testify — and hopefully get more information.

But given Allstate’s track record in Florida and other states, he wasn’t too optimistic. That leaves the insurance commissioner to consider what remedies OIR can take to compel Allstate to meet the state statute. One possibility: fines of $10,000 a day until the company delivers the documents and information the OIR is seeking. The ultimate sanction would be to revoke Allstate’s license to sell insurance in Florida.

OIR also is holding a news conference Wednesday morning to discuss an important property insurance issue. No other details were released.

The joint Senate committee, meanwhile, issued a list with its first witnesses for hearings on Feb. 4 and 5: Nationwide Insurance, Hartford Insurance, American Strategic Insurance, Florida Farm Bureau — and Allstate.

Rep. Dan Gelber, D-Miami Beach, called for hearings in the Florida House as well.

”I am also extremely concerned that the clock will run out on any savings because the enhanced reinsurance capacity of the CAT fund will soon expire,” said Gelber, noting that the expansion of the state CAT fund was set up for one year.

Breaking News: Allstate Stonewalls Florida Insurance Regulators (Updated)

What a day folks and now we have breaking news. Allstate has been less than forthcoming with insurance regulators and them boys are hoppin’ mad over Tallahassee way. First the AP news story and a copy of the subpeona Allstate saw fit to ignore.

Fla. Regulators Cut Off Allstate HearingTuesday
January 15, 4:45 pm ET
By Brent Kallestad, Associated Press Writer

Florida: Frustrated at Allstate, Regulators Shorten Insurance Hearing

TALLAHASSEE, Fla. (AP) — Florida insurance regulators angrily and abruptly ended a hearing with Allstate executives Tuesday, upset that the company and its attorneys failed to fully comply with a subpoena demanding information on property coverage rates.

The hearing was scheduled to last two days but state officials cut it short after just two hours during which company officials and lawyers were badgered by regulators about why they hadn’t supplied all the documents the state wants, and whether they are following a new law meant to lower premiums.

Insurance Commissioner Kevin McCarty said he planned to bring the Illinois-based insurance giant back later this year when it has answers to the state’s questions.

McCarty said the company faces severe sanctions, including the possibility of losing its license to operate its four Florida companies if it fails to comply again.

“We will take appropriate enforcement actions,” McCarty said. “Their certificates are certainly under review.”

Allstate’s response to some requests as “irrelevant” was “a slap in the face to the regulatory agency,” McCarty said.

Allstate’s legal team and company executives, who were under oath, largely avoided questions about whether it has complied with a Florida law passed last year to give consumers premium relief. That infuriated McCarty.

“What have you got to hide?” McCarty asked as the hearing opened.

Regulators were looking for information on Allstate’s relationships with insurance rating and risk monitoring companies and insurance trade associations.

The panel focused on a new hurricane model that Allstate began using to calculate its rates after Florida lawmakers passed new insurance legislation in January 2007. Under the new model, rates went up, although the company said that wasn’t its intent. That model wasn’t approved by the state.

At one point before taking a 10-minute break halfway through the testy testimony, McCarty laughed aloud at the response to one of the committee’s questions.

“Clearly they’re frustrated with the situation,” Allstate spokesman Adam Shores said. “And we’re frustrated too. We want to have an open and active dialogue to work this thing out.”

Allstate Floridian Indemnity and Allstate Florida Insurance Co. 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

While Allstate told McCarty it planned to drop its request for double-digit rate increases, that did little to assuage him or Sen. Jeff Atwater, R-North Palm Beach. Atwater is chairman of a newly created Senate panel investigating why so few companies have complied with the insurance law.

Atwater wasted little time inviting five insurance executives, including Joseph Richardson, Allstate Floridian Indemnity’s chief executive officer, to testify under oath at a Senate hearing Feb. 4-5.

House Democrats also want in the act.

Rep. Dan Gelber, the Democratic leader from Miami Beach, asked Rep. Ron Reagan, R-Bradenton, to schedule hearings and put insurance executives under oath to find out what’s causing the delays.

“The Florida House should not foster the perception that we are a ‘safe house’ for insurers,” Gelber wrote in his letter to the House insurance committee chair. “We have done very little to prove otherwise.”

Update: the Florida Office of Insurance Regulation has scheduled a news conference for tomorrow morning. Rumors are swirlin’ that Allstate will be kicked out of the State!

Follow the Money Part II: Putting the Screws to the Common Man

Folks this Cowboy saw this in today’s Sun Herald and would like to give a big tip of my 10 gallon hat to Anita Lee over Sun Herald way. Our work raising insurance awareness would not be possible without the bang up job done by Ms. Lee covering these issues and this Cowboy would like to thank Ms. Lee for her dedication to this issue. Notice who represents USAA. It’s none other than our boy Greg Copeland who has his fingers in every insurance pie here in Mississippi.

Today we see her story on the Aiken lawsuit against USAA and once again the hos at Rimkus and their proclivity to change on site work sight unseen is on display. Don’t worry folks them boys are telling us all these changed engineering reports are just an honest mistake…..and if you believe that I got some gold spray painted Pig Scat I wanna sell you for $400/ounce. The story in it’s entirety:

Structural engineer testifies in USAA trial

By ANITA LEE
SUN HERALD

GULFPORT –A structural engineer admitted he changed a report that detailed Hurricane Katrina damage to a homeowner’s property, but told a jury he did so for accuracy and clarity rather than to downplay wind damage so USAA Casualty Insurance Co. would owe less money.

Structural engineer James W. Jordan reviewed several changes he made to the report completed by engineer Roverta Chapa, who actually inspected the property at Henderson Point on the Bay of St. Louis in Harrison County. Chapa and Jordan did not communicate before Jordan made the changes, which was against policy established by Jordan’s employer, Rimkus Consulting Group Inc.

Policyholders David W. and Marilyn M. Aiken claim Rimkus and USAA conspired to defraud them. They want their insurance claim paid in full, plus extra damages to punish the companies. Their lawsuit will resume this morning with testimony from Chapa.

Rimkus and USAA claim the Aikens are seeking more money than they deserve because federal flood insurance paid them policy limits for tidal surge damage, while USAA offered a check to cover what the wind could have destroyed. USAA and other insurance companies exclude such flood damage from coverage, which has led to hundreds of disputes between policyholders and insurers. However, this is the first case with claims of fraudulent engineering reports to reach trial in federal court.

The Aikens maintain a tornado destroyed their vacation home before 25 feet of water inundated the property.

USAA attorney Greg Copeland told the jury during opening arguments that the Aikens simply wanted to maximize their payments for Katrina damage. Their flood coverage totalled $278,000. USAA paid $178,205 in structural and contents damage on a policy that provided more than $680,000 in coverage.

But the Aikens’ attorney, George W. Healy IV, told the jury that evidence would show the companies “intentionally and with forethought came up with a plan to deny legitimate claims.”

Rimkus attorney David Ward said testimony will show the Aikens hired their own engineer because David Aiken accompanied the Rimkus engineer on his inspection and knew the engineer thought water had caused most of the damage. Ward told the jury they would hear firsthand about communications between Rimkus and USAA, so they should not believe Healy. “You can be the judge of the facts,” he said, “not the allegations.”

Follow the Money Pardners to The Fox in the Henhouse

Now this Cowboy has known for a long time that the insurance industry was in charge of the Mississippi Insurance Department, especially when George Dale was in charge and layin’ down with them crooks. Now they is becoming more brazen as one of them hired guns has sashayed out of hiding to do the bidding of his master USAA Insurance Company. His name is Greg Copeland and when he ain’t hepin’ his pay master to keep people homeless or lobbyin’ against the little man for his pay master at big insurance or representing George Dale in court he is is eating at the public trough over at the Mississippi Windpool. Ole Greg sure does get around folks.

Take a look at the windpool website and see if you can tell who runs it? Them boys sure must not be proud of their work up there or else they’d tell us who was on the Board of Directors and such beyond, “The MWUA is administered by a Board of Directors and all rules and regulations are subject to the review of the Commissioner of Insurance. The Board of Directors consists of eight members, five (5) to be representatives of the member companies and three (3) representatives of agencies from the coast area appointed by the Commissioner of Insurance.”

This Cowboy is reminded of the cockroach theory (tip of the 10 gallon hat to Sop for that one) when it comes to that bunch at the windpool. Nothing but bad news and ohhh dawgie do they hide from the sunshine. This Cowboy wonders how much wind pool premium went to things like lavish travel and commish for Greg and the gang? Like Sop pointed out to me after he looked at their financial statement for 2006 that these folks must not have an annual audit. Even worse is the fact that almost 22% of the premiums collected from us good folk in the 6 coastal counties went to commissions in 2006. It don’t take no financial expert to smell the stink on Crane Ridge Drive in Jackson. That smell is so bad this Cowboy can smell it all the way down here on the coast and it stinks worse than pig shit mixed with dead fish!

So this Cowboy is gonna give the folks reading us a two-fer Tuesday as Mr. Copeland and his band of greedy corporate lawyers who make money keeping folks homeless deserves two posts. I also challenge the good folks reading us in New York, Jackson and Washington to follow their nose to the stink this Cowboy describes.

Sunday Bonus Post: Excellent Scruggs Coverage

We have been debating internally whether to cover certain aspects of the ongoing Dickie Scruggs saga as it relates to the insurance litigation here on the coast. To this point we haven’t necessarily had the opportunity, as Mr. Scruggs withdrawal from the old Scruggs Katrina Group occurred before our effort here commenced.

Keeping up with those events in detail is imperative however, due to the huge ramifications for current litigants, especially those using the re-formed law venture once fronted by Mr. Scruggs, the Katrina Litigation Group.

Events in the ongoing federal investigation are now moving forward quickly with the confirmation that Mr. Joey Langston has plead guilty and agreed to cooperate with federal prosecutors. Those keeping a closer watch already knew this bit of information well in advance due to the hard work and dedication of Lotus and her excellent group of knowledgeable Mississippi based commenters at the Folo blog.

For those interested in Scruggs mania and ongoing development in what could ultimately develop into one of the biggest cases of judicial and political corruption seen in this Nation’s history (I sincerely do not believe I am overstating that). I highly recommend pulling up a chair at Lotus’ cyber table and pouring yourself a cup of joe. Warning: The posts and commentary there is highly addictive.

sop

Saturday Two for the Price of One: Consumer Federation Report Blasts Insurance Industry Practices

The Consumer Federation of America released it’s 2007 study of industry profits along with it’s analysis of the reasons behind the numbers. Those of us on the Mississippi Coast can readily identify with the conclusions of the study, conducted by former Texas Insurance Commissioner Robert Hunter. This document is well worth reading and I highly recommend it for those wondering why the 2004 tort reform promise of cheaper insurance after passage has largely never materialized.

“State and national consumer organizations joined the Consumer Federation of America (CFA) today to release a new study concluding that the property/casualty insurance industry continued in 2007 to systematically overcharge consumers and reduce the value of home and automobile insurance policies, leading to profits, reserves, and surplus that are at or near record levels. The study estimates that insurer overcharges over the last four years amount to an average of $870 per household.

The report provides extensive data demonstrating that property/casualty insurance companies are paying out lower claims in relationship to the premiums they charge consumers than at any time in decades. The pure loss ratio, the actual amount of each premium dollar insurers pay back to policyholders in benefits, was only 54.6 cents in 2007. Over the past 20 years, the amount paid back as benefits has dramatically declined from over 70 cents per premium dollar, indicating a huge loss in the value of insurance to consumers.

“Consumers ultimately pay the price for the unjustified profits, padded reserves, and excessive capitalization that exist right now in the insurance industry,” said J. Robert Hunter, the Director of Insurance for the Consumer Federation of America (CFA) and author of the study. Hunter is an actuary, former state insurance commissioner, and former federal insurance administrator.

“The insurance industry reaped record profits in 2004 and 2005, despite significant hurricane activity,” said Hunter. “Profits in 2006 rose to unprecedented heights and 2007 may set a fourth consecutive profit record,” he said. “Unfortunately, a major reason why insurers have reported record-high profits and low losses in recent years is that they have been methodically overcharging consumers, cutting back on coverage, underpaying claims, and getting taxpayers topick up some of the tab for risks the insurers should cover,” said Hunter.

In the last several years, insurers sharply increased premiums for homeowners and commercial insurance and reduced or eliminated coverage for tens of thousands of Americans in coastal areas. Insurers have succeeded in convincing Congress to continue taxpayer subsidies for terrorism losses and are seeking additional subsidies for catastrophe insurance”

Insurance Commissioner to Open Office in Gulfport

I found this Sun Herald article interesting and refreshing. Mr. Chaney is opening an office in Gulfport which is a great move. I would urge the windpool to locate closer to it’s customers as well.

New commish aims at wind-pool rates
Chaney will open Coast office
By ANITA LEE[email protected]

Commercial and residential policyholders in South Mississippi could see a decrease this year in state wind-pool rates, plus policyholders will for the first time have a state insurance office on the Coast.

Mississippi Insurance Commissioner Mike Chaney said between meetings Friday he’s busy but tired after two weeks in office.

“It’s a lot of work,” Chaney said. “I think the people in the department are dedicated to the people that pay the policy premiums. It’s been a learning curve for me… I’m going to do my best.”

He said the job has already proven to him “how staggering a responsibility I’ve got to the people of Mississippi.”

Chaney said Friday he is working with state legislators, who convened their 2008 session Tuesday, and state wind-pool officials to lower wind-pool rates that increased 90 percent for homeowners and 162 percent for businesses after Hurricane Katrina. Chaney said it is too early to discuss details, but he has met with the Coast legislative delegation and is talking to other lawmakers about insurance needs in South Mississippi.

Chaney said his top priority is to stabilize the property and casualty market so insurance is available and affordable. Working to improve the wind pool, insurer of last resort for South Mississippi, also will help stabilize the insurance market statewide, he said.

He said lawmakers from other parts of the state are getting the message that South Mississippi needs stability in its insurance market for economic recovery from Katrina’s devastation.

The Republican commissioner defeated Democratic challenger Gary Anderson in the November election, after Anderson ousted longtime Commissioner George Dale in the party primary.

Chaney also plans to open a Coast insurance office, tentatively Friday. The office will be at 1701 24th Avenue, across from the Gulfport courthouse. Chaney said he is opening the office full time, primarily as a service to consumers who have questions or complaints about insurance.

Chaney said he also will lend support to a state policyholders’ bill of rights, with some revision, and is encouraging U.S. Senate candidates to support a multiple-peril insurance bill co-sponsored by U.S. Rep. Gene Taylor. The bill would add wind coverage to the federal flood insurance program, but would require rates be set at levels appropriate for the risks insured.

Wind Claim Dumping on the Flood Program: The Mechanics

Folks, Sop used actual photographs to explain the concept of claims dumping on his earlier post on the topic, the visual account of which set a site visit record for our little corner of the Internet. Now this Cowboy is gonna explain how big insurance did it, dumping their contractual wind obligations of the U.S. taxpayer. In a whistle blower lawsuit filed over New Orleans way the public adjusters projected that if the error rate they found held true, us taxpayers were bilked out of over $9 BILLION dollars by big insurance. Some examples found by the public adjusters include:

“a group of four-plex apartments in eastern New Orleans were compensated for flood damage with taxpayer money even though they experienced no flooding. Each building in same complex was paid only a pittance for severe wind damage on its regular property insurance policies. American National Property & Casualty Insurance Co., or ANPAC Louisiana Insurance Co., paid the owner of several buildings in the Versailles Gardens subdivision on Alsace Street about $95,000 in flood damages, or about half the value of each property’s individual $200,000 flood policy, even though no flood waters got inside the buildings.”

Over here in Mississippi, State Farm used faulty and on occasion even altered engineered reports to dump their wind obligations on us. Take a look at these two engineering reports, the first one authored by engineer Paul Monie and verified by him as his work product. The second one was altered to let State Farm off the hook without his knowledge or consent. After Steve helped Mr. Beckham track down Paul Monie and it was brought to light that State Farm and their lackeys at Rimkus engineering had no problem defrauding a 70 year old man guess what happened next? You got it folks, State Farm experienced a Come to Jesus moment and paid Mr. Beckham. In fact they paid him so much money he can’t talk about it any more. This Cowboy can talk about how them crooks tried to steal from an old man though and he just did. :)

In fact, thanks to Congressman Gene Taylor we got us a whole list of examples of how crooks in Gucci suits and their scalleywag corporate lawyer enablers tried to screw the good folks on the coast who lost their houses out of big money. We started with ole man Beckham cause Steve knows him but he ain’t the only one by a long shot.

Gene Taylor in his Own Words

Folks this final installment of our Gene Taylor Youtube series is courtesy of Kdreporter, a news intern with the ABC affiliate in Santa Barbara California who interviewed Gene last summer. So lets climb on in the FEMA trailer and hear Gene on Katrina, FEMA and Multi-peril insurance in his own words.

[youtube=http://www.youtube.com/watch?v=G-YpGgR2KVw]

[youtube=http://www.youtube.com/watch?v=-EylfwpqNB0]

[youtube=http://www.youtube.com/watch?v=2uNy4wHzkb8]

[youtube=http://www.youtube.com/watch?v=NW9oQtzulIs]