Florida Pilot

A compendium of random thoughts from a former Washington Beltway insider who is now having a lot more fun flying small airplanes in Central Florida.

Thursday, January 17, 2008

Insurance greed

One of the most outrageous examples of corporate greed is property insurance in Florida. Although there were substantial claims from storms a few years ago, the insurance companies seem to want to make sure that their premium income every year will provide for substantial profit as well as cover claims from the most extreme storm scenario imaginable and, if those storms don't occur, well that is just that much more profit.

One of the largest and most greedy insurance companies operating in Florida is Allstate. When the insurance industry (including Allstate) claimed that skyrocketing property insurance rates were due to increases in reinsurance costs, the state acted to provide low-cost reinsurance and dircted the companies to pass along the savings to policyholders. Instead of doing so, Allstate put in for a 42% rate increase -- this after previous years of huge increases. The state responded by denying the increase and by requesting detailed documentation of Allstate's justification.

Now, several months later, Allstate has still not provided the information so the state of Florida has now restricted Allstate from writing any more highly profitable auto polcies in the state. This is great news! It turns out that the state could have fined Allstate $10,000 per day for refusing to provide the data but Allstate is already being subjected to $25,000 per day penalties in another state for also failing to provide required information. Allstate is crying the blues that the ban will hurt its agents which is true but those agents need to blame the company and greedy management and not the state which is trying to reduce outrageous insurance company premiums and profits. Perhaps the agents can put some pressure on Allstate management to correct its practices -- so far, nothing else has slowed down the greed.


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