Insurance Claims And Issues

Florida Office of Insurance Regulation Putins Allstate Insurance.

    For nearly a year, Allstate Insurance Company and its subsidiaries resisted investigations by the Florida Insurance Commissioner into its Reinsurance arrangements, its unauthorized Catastrophe Models that consistently predicted greater damage -- and thus the 'need' for greater Premiums -- than was predicted by the Catastrophe Models that have long been used in the industry and in Florida, and Allstate's relationships with raters and trade associations.  As readers of this web log know, many posts here have followed the developments during that time, until Allstate exhausted its appeals and Courts overruled its objections to the Insurance Commissioner's investigations.  Now, what the Florida Insurance Commissioner calls "'drastic actions'" have been agreed to by Allstate.  Tom Zucco, "Deal Cuts Allstate's Rates" (St. Petersburg Times Online, Friday, August 15, 2008).

    The capitulation to which Allstate has been forced to consent is as overwhelming in its own way, as the recent invasion of Georgia by the Russian Army.  Allstate's "agreeement" was released on Friday, August 15, 2008, the traditional day of the week to release bad news to the public and press.  The agreement includes these terms:

Allstate will pay a $5,000,0000.00 fine to the Florida Insurance Regulatory Trust Fund under its agreement with the Florida Office of Insurance Regulation, which is the Florida Insurance Commissioner's Office;

Allstate will write 100,000 new Insurance Policies in Florida over the next three years, breaking down into 50,000 new "basic" Homeowner's Insurance Policies and 50,000 new Condominium, Renters and other residential Property Insurance Policies;

Allstate will lower Premiums on its existing "Florida policies" by 5.6 %, it is reported in the linked article, although what kind of Insurance Policies they are is not reported;

Allstate will not seek a Premium Rate Increase for at least a year, although again, the linked article does not identify for what kind of Insurance Policies;

Allstate will continue to 'cooperate' with the Florida O.I.R. investigations; and

Allstate waives its rights to challenge this agreement in Court.

    Allstate is reportedly the Number 2 Automobile Insurance Company in Florida, writing an average of some $564,000.00 in new Premiums a month in that line of business.  It is also reportedly the Number 4 Property Insurance Company in Florida.

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FFB Raises Rejected Rate Request.

     In 2007, Florida Farm Bureau requested a Premium Rate Increase of 26.8% in Florida.

     In early July, 2008, FFB exhausted its appeals of the Florida Office of Insurance Regulation's denial of that request.

     In late July, 2008, FFB asked for a Premium Rate Increase of 28.4% in Florida.  Tom Zucco, "Insurer Still Seeks Rate Hike" (St. Petersburg Times Online, Wed., July 30, 2008).  FFB reportedly has 100,000 Florida Policyholders.

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Thanks for the Insurance and Your Service, Citizen Douglas!

     Thursday, July 31, 2008 is the last day that Mr. Bruce Douglas will serve as the Chair of Citizens Property Insurance Corporation.  Reportedly, Citizens is the largest Homeowner's Insurance Company in the United States that operates as an arm of State Government, and in this case, the State is Florida.

     Citizens also reportedly has 1,200,000 or 1.2 Million Policyholders.  In the 6 years that Mr. Bruce Douglas has been the Citzens Chair, "its exposure to storm damage" has more than doubled, "to $425-billion, but reserves have been rising, thanks to no recent storms."  Mr. Douglas is virtually everyone's dictionary definition of a fine human being.  His public service has been performed with honor.  Consistent peformance of his duties with honor, and a good sense of humor rarely found in those in modern public life, are both on display in this interview by Tom Zucco, "He Leaves Citizens More Stable" (St. Petersburg Times Online, Friday, July 25, 2008).

     Thank you, Bruce Douglas.

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Catastrophe Claims Strip Homeowner's Insurance Coverage, Lift Premiums.

     Since about the time of Hurricane Andrew in 1992, Homeowner's Insurance Policies and other kinds of Property Insurance Policies have been adversely affected by Catastrophe Claims.  Coverage provisions have been narrowed and new Exclusions have been added.  A director of consumer services at Florida's Department of Financial Services is quoted on these issues, for example, by Jeff Plungis, "Homeowners May be Twice Burned as Insurers Cap Policy Coverage" (Bloomberg.com, Wed., July 16, 2008).  "Policies are written annually so insurers can add exclusions."  Id.  (This last observation makes sense, but it applies to virtually all Insurance Policies.)

     One transformation of Coverage has been the nearly uniform refusal to provide "guaranteed replacement cost" Coverage, with Property Insurance Companies instead offering Coverage with a cap called "extended replacement cost" which by any name does not cover the actual cost of replacing a home totally destroyed by a Catastrophe.  These developments over the last 15+ years, which have been chronicled in many places including in previous posts here, for example, lead to the newspaper article's wise advice that "people should review their homeowners' coverage to make sure dollar amounts keep pace with currrent construction expenses."  Id.

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Level of Insurance Coverage Levels the Playing Field.

     Disputes between Insurance Companies and their Policyholders is nothing new.  In California, for example, there is a dispute brewing about who is responsible for maintaining levels of Insurance Coverage necessary to provide the money to rebuild after recent wildfires there, the Insurance Companies or the Policyholders, or both.  Marc Lifsher, "Wildfires Heat up Debate on Inadequate Insurance Coverage" (Los Angeles Times Online, Friday, June 6, 2008, a link which may or may not work if TypePad issues are not resolved, but available online at www.latimes.com.

     One thing remains certain.  Maintaining the level(s) of Insurance Coverage which provide payouts adequate to rebuild a home after a covered loss is a very good idea if the desired result is to rebuild a home after a covered loss.

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Flip-Flopping Premium Hikes Rejected in Florida.

     Hartford reportedly at first "voted" against Premium Rate Hikes by announcing it would reduce Premiums by 13.6% effective 06.01.08, then it "voted" for Premium Rate Hikes by asking for a 39.6% Premium Rate Hike effective in 09.08.  Following a new procedure in Florida, the Hartford first presented its request to an Adminstrative Law Judge.  The Florida Judge denied Hartford's Rate Hike request.  Then Hartford took an appeal to the Florida Office of Insurance Regulation.  The O.I.R. affirmed the Judge's decision.  See Anika Myers Palm, "State Curbs Hartford Rate Hike," p. C2, col. 2 (Orlando Sentinel, Tuesday, June 3, 2008), available online at www.orlandosentinel.com.

     It is also re-reported in the newspaper article that in February, 2007, Hartford announced that it was not renewing 40,000 Homeowner's Insurance Policies in Florida.

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"The scope of OIR's investigation ...."

".... cannot be limited by Allstate's unilateral actions."

Page 17 of the attached Official Opinion Denying Rehearing by Florida's First District Court of Appeal in Download Allstate_v. Office of Insurance Regulation (Fla. 1st DCA Case No. 1D08-0275, Opinion Filed May 14, 2008).pdf.

Florida's Office of Insurance Regulation (OIR) has prevailed in its judicial dispute with various Allstate Insurance Companies about OIR's right to receive subpoenaed documents and to impose a ban on selling new Insurance Policies until Allstate provided the subpoenaed documents:

The facts of this case are unique.  In order to conduct insurance business in Florida, Allstate is statutorily required to comply with OIR's investigation and make 'freely available' documents sought by OIR....  To the extent Allstate believed any documents OIR sought were privileged, Allstate was required to timely seek a protective order in circuit court.

Id.  Allstate did not seek a protective order in circuit court.  The First District denied rehearing of its earlier Order upholding the OIR's suspension of new policies until the Insurance Company complied fully with OIR's subpoenas.

     The same day that the First District Court of Appeal denied rehearing, Allstate provided a sworn affidavit to the Florida Office of Insurance Regulation that all the subpoenaed documents had now been provided.  The OIR lifted the suspension as a result.   See Florida Office of Insurance Regulation Press Release, "Florida Insurance Commissioner McCarty Stays Allstate Suspension, Continuing Compliance Required," Wed., May 14, 2008.  Anika Myers Palm, "State Lifts Allstate Ban, Allows Insurer to Take New Customers" (OrlandoSentinel.com, Saturday, May 17, 2008).

    On Wednesday, May 21, 2008, Dennis Wall will discuss these and other major developments affecting Hurricane Insurance Preparation before the 2008 Hurricane Season.    This presentation is open to the public and there is no charge.  It is offered by the Insurance Law Committee beginning at Noon and scheduled to run through 1:00 P.M. at the Orange County Bar Association Center, 880 North Orange Avenue, in Orlando, Florida.  Dennis Wall, Chair of the Insurance Law Committee, will speak about many ways of "Preparing for Hurricane Insurance".  You are cordially invited to attend this free presentation.  As a reminder:  In Florida, the 2008 Hurricane Season officially begins on June 1, 2008.  There is no better time to begin preparing.

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Florida O.I.R. Lifted Suspension of New Allstate Policies...

... The Same Day Florida's First District Court of Appeal Denied Rehearing of its Opinion Upholding O.I.R.'s Order Suspending New Allstate Policies.

     Press reports published on Saturday, May 17, 2008 made it appear that the Florida Office of Insurance Regulation (O.I.R.) lifted its suspension on new Allstate Insurance Policies on Florida on the day before, or Friday, May 16, 2008.  As you will recall, the O.I.R. issued its Suspension Order in the first place because Allstate failed to comply with O.I.R. subpoenas for various groups of documents including unauthorized Catastrophe Computer Models purchased by Allstate in connection with its Premium Rate Increase requests.

     According to the O.I.R., it announced a stay of its Suspension Order on Wednesday, May 14, 2008, immediately after the Florida appellate court denied rehearing of its Opinion upholding the O.I.R. Order.  The reason given by the O.I.R. was its receipt of a sworn affidavit from Allstate "certifying that it has complied with Florida law by freely providing all documents requested" by the O.I.R.  See Florida Office of Insurance Regulation Press Release, "Florida Insurance Commissioner McCarty Stays Allstate Suspension, Continuing Compliance Required," Wed., May 14, 2008.

     Dennis Wall, Chair of the Insurance Law Committee, will speak at the Orange County Bar Association Center in Orlando, Florida about Preparing for Hurricane Insurance, on Wednesday, May 21, 2008 from Noon to 1:00 P.M.  The Orange County Bar Association Center is located at 880 North Orange Avenue in Orlando, Florida.

    You are cordially invited to attend this free public event.  Hope to see you there. 

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Preparing for Hurricane Insurance.

    Dennis Wall, Chair of the Insurance Law Committee, will speak at the Orange County Bar Association Center in Orlando, Florida about Preparing for Hurricane Insurance, on Wednesday, May 21, 2008 from Noon to 1:00 P.M.  The Orange County Bar Association Center is located at 880 North Orange Avenue in Orlando, Florida.

    You are cordially invited to attend this free public event.  Here  is a link to the "EVENTS" published about this presentation by the Orlando Sentinel on Monday, May 19, 2008 on page C3, col. 1, in "The Law & You" Section.

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Hurricane Regulation in Florida: Allstate Swayed To Produce Documents.

     Allstate lost its motion for rehearing of a Florida appellate court ruling that upheld a ban on Allstate issuing new Policies in Florida until Allstate provided documents subpoenaed by the Florida Office of Insurance Regulation.  That was on May 14, 2008.  Download Allstate_v. Office of Insurance Regulation (Fla. 1st DCA Case No. 1D08-0275, Opinion Filed May 14, 2008).pdf.

     By Friday, May 16, 2008, the Florida Office of Insurance Regulation received an affidavit under oath from Allstate that it had then given all the subpoenaed documents to the O.I.R.  The O.I.R. then gave Allstate permission to again sell new Insurance Policies in Florida.   Doreen Hemlock, "Florida Lifts Ban on New Policies After Submitting Documents" (South Florida Sun-Sentinel.com, Saturday, May 17, 2008).

    On Wednesday, May 21, 2008, Dennis Wall will discuss these and other major developments affecting Hurricane Insurance Preparation before the 2008 Hurricane Season.    This presentation is open to the public and there is no charge.  It is offered by the Insurance Law Committee beginning at Noon and scheduled to run through 1:00 P.M. at the Orange County Bar Association Center, 880 North Orange Avenue, in Orlando, Florida.  Dennis Wall, Chair of the Insurance Law Committee, will speak about many ways of "Preparing for Hurricane Insurance".  You are cordially invited to attend this free presentation.  As a reminder:  In Florida, the 2008 Hurricane Season officially begins on June 1, 2008.  There is no better time to begin preparing.

Please Read The Disclaimer.