A continuing Florida probe of "potential collusion" over rates by property insurers is the result of a "warlike" political atmosphere setting state public officials against carriers, a trade group executive said today.
The comments from Sam Miller, executive vice president of the Florida Insurance Council, were in response to yesterday's official announcement that State Farm will cooperate with "further investigations related into potential collusion between insurers, trade associations and rating organizations."
State Farm's agreement, which concluded an investigation of the company, also involved lowering its homeowners' rates in the state 9 percent; paying legal costs of the Office of the Attorney General and Office of Insurance Regulation (OIR); and refunding $23.3 million in surcharges to customers.
Edward Domansky, an OIR spokesman. said the investigation into collusion "is still ongoing." He said mention of the investigation was made in the State Farm agreement to make it known that the state's largest home insurer is cooperating with the probe.
"OIR has not concluded that piece of the investigation," he said.
Chris Neal, a State Farm Florida spokesman, said of the reference to a collusion investigation that the company is "not involved in anything like that" and referred questions to the OIR.
Mr. Domansky said he could not disclose which other companies or groups may have been subpoenaed.
Mr. Miller at the Florida Insurance Council said his organization has not been subpoenaed. "We don't believe there is any collusion," he said. "The companies have always been very aware what they can and can't do."
He added, "It's ridiculous to think insurers get together in a room and conspire on rates. We can't even get them in a room to agree on legislation."
The OIR, he said, had not found collusion at State Farm. "There is no collusion. This is an incredibly political, warlike situation, and it's about rate struggles between public policy officials and insurers," he surmised.
Mr. Miller said 300 companies had made rate filings with the OIR, and that "most have been trashed because we can't magically produce the rate savings they want."
In addition to State Farm, the OIR issued subpoenas to Cincinnati Insurance Companies in Ohio, asking in part for records relating to its reinsurance program and communications with trade associations, rating agencies and risk modeling firms, the company said.
Cincinnati Insurance has challenged the investigation in 2nd Judicial Circuit Court for Leon County in Tallahassee, Fla., and has a hearing scheduled for next Wednesday.
Joan O. Shevchik, speaking for Cincinnati Insurance, said the company has continued to provide materials to OIR in the interim.
Cincinnati's petition to the court contends the OIR has exceeded its investigative authority, and that the records sought would air policyholders' private information, discuss the company's proprietary information, and disclose non-public information that investors could deem material.
Auto-Owners Insurance Group in Lansing, Mich., also has been subpoenaed for similar material, and has petitioned the court with similar objections. The firm has also been called to appear for a hearing before the OIR on Oct. 11. The company did not immediately respond to a request for comment.
Rating agencies contacted indicated that at this point they had received no subpoena.
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