Tallahassee, Fla. — The travails of Allstate Cos. in Florida are at an end after the company reached a limited agreement with the Florida Office of Insurance Regulation.
The company agreed to pay a $5 million fine to resolve issues stemming from Allstate’s September rate filing. Other terms of the agreement require Allstate to lower its homeowners insurance rates in all territories of the state by 5.6% within 30 days of this agreement, for a total reduction of 19.8% when including the 14.2% reduction that took effect June 1, 2007. Allstate also must write 100,000 new homeowners insurance policies over the next three years. Also, Allstate’s corporate office must cancel a $175 million surplus note it issued to the Florida Allstate companies.
“It is unfortunate that Allstate’s disregard of Florida law required the Office to take the drastic actions that we did in order to bring Allstate into compliance,” says Florida Insurance Commissioner Kevin McCarty. “However, the terms agreed to by Allstate in the consent order go a long way toward restoring confidence in Allstate’s business practices and will provide a great benefit to their policyholders and future policyholders.”
The $5 million fine will be paid within 30 days of the agreement by the Allstate corporate office in Northbrook, Ill., not by the Florida companies. The fine will be paid to the Insurance Regulatory Trust Fund. Of the 100,000 new policies to be written over the next three years, 50,000 must be basic homeowners policies, and 50,000 must be condominium, renters and other residential property insurance policies.
In addition, Allstate agreed to cooperate with the Office’s ongoing investigation into the relationships between insurers, trade associations, rating organizations, modelers, reinsurers, reinsurance brokers and other entities.
Allstate was suspended January 17 after the commissioner abruptly halted a January 15 hearing that was to look into the Allstate Companies’ reinsurance program, their relationships with risk modeling companies, insurance rating organizations and insurance trade associations.
Allstate was to have provided all appropriate company documents related to the above topics by January 15 and was to have brought appropriate witnesses to testify about the documents and issues at the January 15 hearing, but failed to do so. Instead, the Office of Insurance Regulation received 51 pages of objections to the subpoenas.
Source: Florida Office of Insurance Regulation
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