Insurance Claims And Issues

California Contemplates Car Coverage For Miles.

     A new plan to base Automobile Insurance Premium Rates on the number of miles a Policyholder actually drives is being gassed up by a combination which includes some Insurance Companies, environmentalists, and California State legislators.  Here is how it would reportedly work.  Policyholders would agree to pay Premiums for their Auto Insurance based on how many miles they drive.    Pilot programs are reportedly posted by Progressive Corporation in Michigan, Minnesota and Oregon.  GMAC also offers the so-called pay-as-you-drive Automobile Insurance Premiums to a reported 30,000 willing Policyholders across the nation where such plans are authorized at this time.  Marc Lifsher, "State Considers Pay-As-You-Drive Auto Insurance" (Los Angeles Times, Tuesday, July 15, 2008).

     The catches include reported privacy concerns and business failure.  First, the business failure concerns.  The pay-as-you-drive Auto Insurance Premium system was attempted in the United Kingdom two years ago by Britian's largest Auto Insurance Company, Norwich Union.  Last month, Norwich Union cancelled the program because so few people wanted it.

     Second, the privacy concerns.  Implementation of the pay-as-you-drive system apparently requires that a device be hardwired to your car to monitor the actual number of miles you drive.  (Estimates of how much you will drive not being dependable enough, apparently.)  The mechanical monitors also record your location and it is unknown to the general public what if any other things about you they record, whether or not you know it.

     For every try at lowering Insurance Premiums, there is a tradeoff of one kind or another.

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Florida Court Upholds Allstate New Business Suspension Until Documents Produced.

    Florida's First District Court of Appeal issued its Opinion on Friday, April 4, 2008 upholding an Order suspending Allstate's authority to transact new business in Florida:  Download Allstate_v. Office of Insurance Regulation (Fla. 1st DCA Case No. 01D08.0275, Opinion Filed 04.04.08).pdf.  See the posts in this space through January 24, 2008 to understand the leadup to this event.  In basic and simple terms, the saga began in the Fall of 2007 with subpoenas by the State of Florida Office of Insurance Regulation, Allstate's refusal to produce the requested materials at an O.I.R. Hearing in January, 2008, and the O.I.R.'s immediately resulting Order suspending Allstate's authority to conduct new Insurance business in Florida.

    The Order was issued by the Florida Department of Insurance or Office of Insurance Regulation.  The Order, termed an Immediate Final Order or IFO, "immediately suspended Allstate's Certificates of Authority to transact new insurance business in Florida.  The suspension would terminate upon Allstate producing documents OIR previously subpoenaed in an investigation of Allstate's insurance practices."

    The Florida Appellate Court held that OIR was within its rights to issue this narrowly tailored Order to enforce its own subpoenas.  Allstate v. Office of Insurance Regulation, attached official Opinion of the Court, at 2.  The OIR Order is narrowly tailored because it "was limited in scope."  Id. at 13.  The OIR could have issued an Order suspending any Allstate business, the First District appellate panel unanimously wrote.  "In limiting the scope to suspension of new business, OIR's action mitigates the  potential harm from Allstate's alleged insurance practices while still allowing Allstate to service existing policies."  Id.

    The documentation Allstate refused to produce -- and all 30,000 documents Allstate did produce were each and every one labeled "Trade Secret" -- were in response to subpoenas "in connection with OIR's investigation of Allstate's relationship with risk modeling companies, insurance rating organizations, trade associations and compliance" with legislation concerning Premium Rate Increases passed at the 2007 Special Session of the Florida Legislature.  Id. at 2-3.

    The Order in question was issued by the OIR in response to Allstate's refusal to produce almost all of the documents actually requested by the OIR and "Allstate's 51 pages" of objections.  Id. at 6.

    The First District's decision was to affirm and immediately lift its earlier stay of the OIR Order.  Allstate in its many manifestations which are parties to the appeal -- e.g., Allstate Floridian, Allstate Indemnity, Allstate Property & Casualty, Allstate Insurance, etc. -- has time if so advised to file a Motion for Rehearing and possibly to seek appellate review in the Supreme Court of Florida.

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Auto Lines Line Up Profit Hikes.

   Many Auto Insurance Companies reportedly have been seeking to raise Premiums in 20 States or more.  In the $160 Billion Automobile Insurance Industry, the 4 largest Automobile Insurance Companies ranked by Premiums charged are currently State Farm Mutual Automobile Insurance Co., Allstate Corp., Progressive Corp. and GEICO Corporation.  Safeco, another familiar Auto Insurance Company name, is ranked 13th by the total amount of Auto Insurance Premiums it charges.

   There are two reasons given for the Premium increase, and the two reasons given relate to Property Damage Insurance and to Bodily Injury Coverage:  Increasing costs for Auto Repair and for Medicalcare.  Erik Holm, "Auto Insurers Boost Premiums on Injury, Crash Costs (Update1)" (Bloomberg.com, Fri., Feb. 8, 2008).

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Make a Buck for Citizens in Florida: Auto Insurance Too?

    At least one concerned Florida citizen has written a letter to the editor regarding what that citizen perceives as attempts by various Insurance Companies to circumvent legal requirements put in place in 2007.  That year, in a Special Session of the Florida Legislature, Insurance Companies were mandated to, among other things, make Homeowner's and other Property Insurance Policies available in Florida if the same Insurance Companies or their parents offer (the much more lucrative) Auto Insurance Policies in Florida.

    The letter writer suggests that Insurance Companies are evading the 'offer one, then offer two' rule and suggests a solution:  Allow Citizens Property Insurance Corporation, a public corporation owned by Florida Taxpayers, to issue not just Homeowner's and other Property Insurance Policies that private Insurers do not want to touch, but also allow Citizens to issue Auto Insurance Policies, too:  "Citizens, Consider Adding Auto Insurance" by Samuel Z. Kobran ([Ft. Lauderdale] Sun-Sentinel .com, Friday, March 28, 2008).

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California Commissioner Cuts Allstate Auto Premiums.

   In a move echoed in other areas such as Florida, the California Insurance Commissioner reportedly has ordered Allstate to cut Premiums on Automobile Insurance by 15.9%.  That would reduce Premiums by about $133.00 a car and it would be twice the reduction that Allstate offered its Automobile Insurance Policyholders.   Marc Lifsher, "Allstate Must Cut California Auto Insurance Rates 15.9%" (Los Angeles Times Online, Wed., March 19, 2008).

   It is also reported that the next front on the Premiums battleground in California will come in the area of Homeowner's Insurance.

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Premiums Increase More Because Road Safety, or Traffic? True, False?

                                                      True!

    A study published by the American Automobile Association provides evidence that "roadway safety," i.e., accidents, cost much more than traffic congestion.  The cost of accidents, says the AAA study, is 250 percent greater than the cost of "traffic tie-ups".  Angela Greiling Keane, "U.S. Road Safety Needs Focus Over Traffic, AAA Says (Update 2)" (Bloomberg.com, Wed., March 5, 2008).

    On the strength of these results, it appears to be pretty clear that to help keep Automobile Insurance Premiums under control -- and to help keep more people in our country alive and healthy -- public monies would be well spent in the direction of preventing accidents and not just building more roads capable of delivering more traffic and more accidents.

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Scouting for Automobile Insurance Companies.

    Here is a list with contact information of many Automobile Insurance Companies operating in the broad area surrounding Boston, Massachusetts.  The source is given as the Massachusetts Insurance Department.

    What a lengthy list of potentially valuable resources.  If you or those you represent are in the market for an Automobile Insurance Policy, see if these companies are in areas of interest to you.  Then, you can use this contact information to obtain and compare their responses to see which Automobile Insurance is best for you.

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"Diminished Value" Automobile Insurance Coverage Claims.

   "Diminished value" Automobile Insurance Claims are claims for Insurance Coverage for the diminished value of an auto that has been in accident and has had to be repaired.  They are discussed as the cutting edge of a new wave of Insurance Coverage Claims in Gregory Karp, The (Allentown) Morning Call, reprinted as "Insurer Pay You Enough After Accident?" p. G1, col. 6 "Your Money" Section (Orlando Sentinel, Sunday, March 2, 2008).

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Allstate and the Florida Office of Insurance Regulation.

    Here is a summary and the status of Allstate's appeal from an order of the Florida Office of Insurance Regulation which sanctioned Allstate for failing to produce documents subpoenaed by the OIR for a Hearing in January:

     On Jan. 17, Kevin M. McCarty, the state's insurance commissioner, banned Allstate and its affiliates from selling new insurance policies in the state after the company failed to turn over records to state officials investigating insurance pricing.  A state appeals court blocked the order pending Allstate's appeal.

Joe Follick & Kirk Semple, "Florida Insurers Defend Increases in Home Rates" p. A19, col. 5 (New York Times Nat'l Ed., Tuesday, February 5, 2008).

    Here is the opinion of one person that the Florida State Government is on the right track in pursuing the subpoenaed documents:  Robert Trigaux, St. Petersburg Times Business Editor, "It's Time for Florida to be a  Heavyweight on Insurance" (sptimes.com, Sunday, January 20, 2008).

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Allstate Provides some Documents to Florida.

            Slow Drip, Drip, Drip of Documents Planned While Appeal is Decided.

     The so-called McKinsey Report on insurance behavior in handling claims and increasing profits was among many, many documents subpoenaed by the State of Florida from Allstate.  History helps to understand.  See previous posts here as well as the brief summary below.

     With at least 60 days to respond to subpoenas served on it by the Florida Office of Insurance Regulation, Allstate on January 15 announced its decision not to provide documents.  Instead, Allstate filed 51 pages of objections that day.

     On January 16, the OIR suspended Allstate's certificate to do business by issuing any new Automobile Insurance Policies until it complied with the OIR subpoena.  On January 17, the OIR apparently entered a further order suspending Allstate's certificate for all new Insurance Premium business of any kind in Florida until Allstate complied with the supoenas.  That meant that Allstate could not collect new Premium money while its certificate was suspended.

     Allstate appealed this decision on January 17.

     On January 18, a Florida appellate court stayed the OIR order until the appeal was done.

    The latest development for now occurred on January 23, 2008.  It is now reported that one of Allstate's 51 pages of objections was that the McKinsey Report addressed  how to maximize profits for Allstate from handling Automobile Insurance claims rather than any other kinds of claims for losses such as Homeowner's and other Property Insurance claims.

    On Wednesday, January 23, 2008, Allstate produced some documents in response to the Florida subpoena even as Allstate pursues its appeal.  Allstate's limited production includes the seeming distraction of the McKinsey Report.  According to the news article, Allstate apparently plans to produce more documents in phases as it hopes for a favorable ruling on appeal.  See Anika Myers Palm, "Allstate Provides Documents to State" p. C1, col. 5 (Orlando Sentinel Central Florida Business Section, Thursday, January 24, 2008).  To be fair, the headline on this newspaper report should read, of course, "Allstate Provides Some Documents to State".

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