Florida Insurance Commissioner Kevin McCarty 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 October 16, 2007 by the Office of Insurance Regulation (Office). A copy of the order is available by clicking here.
The decision by the commissioner follows Tuesday’s (January 15, 2008) 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. The subpoenas seek disclosure of the McKinsey Documents, in which McKinsey & Co. instructed Allstate how to systematically underpay claims starting in the mid 1990s. The content of the documents is so explosive that Allstate has already ignored a $25,000 per day fine in Missouri for its ongoing failure to provide the McKinsey Documents in that state.
The McKinsey documents were the subject of a previous blog which can be viewed by clicking here.
“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 Florida Office of Insurance Regulation has suspended a company for failure to “freely” provide documents as required by Florida law.
A copy of the subpoena is available by clicking here.
A copy of Allstate’s response is also available by clicking here.
In powerful new videos, three courageous individuals share how systemic health care quality problems forever changed their lives and the lives of their parents, children, and families. The subjects in the videos are members of the Consumer Health Quality Council of Health Care for All and make a powerful call for reform. You can view them by clicking here.
Health Care For All seeks to create a consumer-centered health care system that provides comprehensive, affordable, accessible, culturally competent, high quality care and consumer education for everyone, especially the most vulnerable. The organization works to achieve this as leaders in public policy, advocacy, education and service to consumers in Massachusetts.
The video stories show how systemic problems in the quality of health care can have a permanent impact on lives. Health Care for All posted these stories to share their experiences and to enact change in the health system for the benefit of future consumers.
In the first video, Linda lost her mother to preventable medical errors. In the second, Ginny’s life was changed forever by a preventable hospital-acquired infection. And in the third, Lisa survived a terrible misdiagnosis and as an empowered health care consumer later saved her daughter from the same misdiagnosis.
If you are moved to do something, please visit http://www.hcfama.org/quality to join the movement for a safer, higher quality health care system.
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, released by the Consumer Federation of America, 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 to pick up some of the tab for risks the insurers should cover,” said Hunter.
You can view the full study by clicking here.