Florida authorities said today that Allstate is the latest insurer to be subpoenaed for information and testimony about homeowners’ rates in an ongoing investigation that is examining possible collusion by insurance groups.
Subpoenas have been served on 10 Allstate companies doing business in Florida by the state Office of Insurance Regulation, which said it has directed their management to appear for two days of public hearings Jan. 15-16, 2008 in the state capitol at Tallahassee.
Meanwhile, the OIR said it was cancelling a hearing that had been set for Cincinnati Insurance Co. and the Cincinnati Indemnity Co.
OIR said it wants Allstate testimony about its companies’ reinsurance programs, their relationships to risk modeling companies, insurance rating organizations or companies and insurance trade associations and “all appropriate company documents related to the above topics also are to be provided.”
Allstate companies have put in requests for big rate increases and Insurance Commissioner Kevin McCarty said, “The legislation enacted in January was very specific about its requirement that insurers reduce the rates they are charging for homeowners insurance.”
That legislation provided insurers with discount reinsurance from the Florida Hurricane Catastrophe Fund, and officials said they expected to it to result in a rate drop.
“We are continuing to investigate those companies that appear to be ignoring the intent of the legislature in its efforts to reduce premiums to consumers, and we want to hear the reasons behind those companies’ actions,” Mr. McCarty said.
Allstate Floridian Indemnity and Allstate Florida Insurance Company are requesting rate increases of 28.3 percent and 41.9 percent respectively. Encompass Floridian Indemnity is requesting a 38.4 percent increase, and Encompass Floridian Insurance Company is requesting a 39.7 percent increase.
Adam Shores, a spokesperson for Allstate Florida operations said the insurer shared the concern of Republican Gov. Charlie Crist and the OIR “over Florida’s property insurance market. We have advocated for a national natural catastrophe fund.”
Asked about the OIR’s prior statements that it is examining possible collusion among insurance interests, Mr. Shores said “We remain very confident in our business practices and our adherence to state law.” The firm, he said, “is committed to our customers and remaining financially solvent to meet the promise we’ve made to them.”
Mr. Shores said company attorneys were examining the subpoenas and he could not immediately say there would be any court challenge.
Last week Cincinnati Insurance Co. and the Cincinnati Indemnity Co. lost a court battle to limit the scope of similar subpoenas. The court said it could not act unless OIR files an enforcement action.
However, Cincinnati said it had reached an understanding with OIR to narrow the scope of the subpoena and is “reasonably comfortable with the current status” and OIR assurances it would protect proprietary trade information and policyholders privacy of its policyholders.
Cincinnati said it would have representatives at the hearing that had been scheduled for this Thursday. “We are confident we can demonstrate that our practices and our relationships with industry organizations are above-board and ethical, and our Florida homeowners rates are among the lowest in the state,” the company said.
In cancelling the Cincinnati hearing the OIR issued a statement saying it “reviewed the materials provided to date by Cincinnati and determined a need to issue additional subpoenas for additional information,” adding, “this is the only information the Office is able to provide about the new subpoenas.”
Besides Allstate and Cincinnati, Auto-Owners Insurance Group in Lansing, Mich., has been subpoenaed for similar material and a hearing.
The Allstate units given a subpoena were: Allstate Floridian Indemnity Company, Allstate Floridian Insurance Company, Allstate Fire and Casualty Insurance Company, Allstate Indemnity Company, Allstate Insurance Company, Allstate Property & Casualty Insurance Company, Encompass Floridian Indemnity Company, Encompass Floridian Insurance Company, Encompass Indemnity Company and Encompass Insurance Company of America.