Allstate’s Surrender May Give State Long-Awaited Answers

The Tampa Tribune--April 12, 2008

Charlie Crist ran for governor promising his election would bring lower property insurance rates.

He kept his word, but barely, and only after lawmakers passed complicated legislation that has put Florida’s taxpayers at risk should another major hurricane come barreling ashore in a population center like Tampa.

Almost universally, the insurance companies accuse Crist and the Legislature of excessive rhetoric and misrepresentations. But they haven’t been candid, either.

Yes, they are regulated. Yes, their claims practices are reviewed by the department of insurance. But after two hurricane-free years, the companies have recorded record profits and still ask for more. Even those of us who have long advocated free markets to control costs are sick of it.

How, after so much money has changed hands, can they seek an increase in premiums? Allstate’s request, for example, ranged from 28.3 percent to 41.9 percent, depending on where its policyholders were located. But when Kevin McCarty, the state’s insurance commissioner, asked the question, he was ignored.

So his department subpoenaed Allstate. The company then claimed the information he wanted is proprietary and involved trade secrets. Knowing full well Allstate’s history of defiance – the company had refused to release documents in another court case and spent millions rather than answer – McCarty decided to strip Allstate of the right to sell any insurance, including lucrative auto coverage, in Florida.

McCarty was justified in holding Allstate to the fire, and now a court has ruled he went about it the right way.

The First District Court of Appeal said McCarty followed the law when he moved to shut the businesses down. And how did Allstate respond? By releasing some 150,000 pages of documents and taking a different public relations tack. “Accuracy is best served,” Allstate said, by releasing the documents.

Maybe, but it’s also possible that flooding the Web site with paper is more evidence of obfuscation. “Because of the need to address misunderstandings resulting from the growing misplaced focus by our critics on very small pieces of the whole,” a company spokesman wrote, “we have decided to make the documents public.”

Right.

McCarty wants some pretty basic information: How does the company figure its risk? What time frames does it use? Is it inflating prices?

To be sure, Florida is a risky state to insure. The likelihood of a hurricane striking here is greater than along any coast in the United States. And insurance companies have to make money to pay off claims when bad weather happens.

But the regulators were right to press for the records and cut off other sales until the company comes forward with answers.

Florida’s homeowners and policyholders are eager to know whether we have been treated fairly or gouged.