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State berates Allstate request

Published November 2, 2006


State regulators had reviewed Allstate Floridian’s rate-hike request and were ready to pounce. Thursday afternoon in Tallahassee, they got their chance.

In one of the most contentious rate hearings  in recent memory, actuaries and attorneys from the Florida Office of Insurance Regulation grilled Allstate officials for more than three hours about justifying a double-digit increase.

Regulators said later many of the answers they got were incomplete or vague, and they’ll have to go at it again.

Allstate Floridian and Allstate Floridian Indemnity are seeking average statewide increases of 22.5 and 33.2 percent, respectively, for their homeowners policies. But in some areas, the rates could be as high as 73.5 percent.

In parts of Pinellas and Pasco counties, rates could rise as much as 70.4 percent.

Homeowners in Florida have been hit with higher average increases than what Allstate proposes . But Allstate differs in that it has dramatically cut back the number of homes it insures. 

Allstate has cancelled about 240,000 policies since the 2004 hurricane season, leaving the company with about 390,000 policies.

Even before questioning began, George Grawe, Allstate Floridian’s general counsel, said his company would submit an amended filing that would lower the rate. Regulators gave Allstate until noon Monday to amend it.

However, Allstate didn’t back off the methodology for putting its request together .

 OIR general counsel Steve Parton asked Allstate’s senior actuary, Ryan Michel, about the computer model  used to determine its rates. By law, it  must be approved by the state.

Parton: “The model is out of date, is it not? Aren’t you, as an actuary, supposed to understand the law?”

Michel: “I rely on our legal advice.’’

Another exchange between OIR actuary Bob Lee and Allstate regional manager Bonnie Gill resembled a courtroom showdown:

Lee: “You support a 75 percent cap (on premiums), but there’s no support here. Why?’’

Gill: “We chose that judgmentally.’’

Lee: “But how did you arrive at it?’’

Gill: “Purely judgment.’’

Lee: “You didn’t do any fiscal testing other than it looked like a good number?’’

Gill: “It had a lot to do with the 2005 filing. 75 percent was the maximum last time, so we chose that again.’’

[Last modified November 2, 2006, 22:00:30]

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