Allstate Settles Dispute With Florida Regulators
On Friday, Allstate reached a settlement with Florida’s Office of Insurance Regulation(OIR) and will be forced to pay $5 million fine. Allstate has been in a longstanding dispute with regulators over rate reductions and the subpoena of the company’s internal trade documents.
As part of the agreement, Allstate is required to lower its homeowners insurance rates throughout the state by 5.6 percent within 30 days of this agreement. The total rate cut amounts to 19.8 percent, including the 14.2 percent reduction that took effect June 1, 2007.
Allstate also must write 100,000 new homeowners insurance policies during the next 36 months and its Northbrook, Ill., corporate office must cancel a $175 million surplus note it issued to the Florida Allstate companies.
Back in January, the Florida’s insurance commissioner Kevin McCarty suspended Allstate from writing new policies in the state for failing to comply with a court order. Then in April, a Florida Appeals Court ruled against Allstate when it alleged that the OIR had exceeded it’s authority.
This isn’t an isolated incident either, the insurance industry has been on the defensive ever since the public’s backlash stemming from the aftermath of Hurricane Katrina. State regulators across the country have been exerting their power, which is why it comes as no surprise that the industry is in favor of the creation of the Optional Federal Charter.
Allstate couldn’t win this fight but at least it can finally get back to the business of insurance instead of court battles.
