The Big Story: Finally standing up to Big Insurance
January 17, 2008 at 2:31 pm by Wayne GarciaFlorida’s insurance commissioner, Kevin McCarty, finally called “bullshit” on a big carrier yesterday and temporarily stripped Allstate of its ability to write lucrative new auto insurance policies. The St. Petersburg Times wrote in near-heroic prose:
Florida Insurance Commissioner Kevin McCarty gripped the lectern and leaned into the bank of microphones.
“We’re going to hit them where it hurts,” he said.
In a move unprecedented in Florida regulatory history, McCarty on Wednesday issued an order banning Allstate Insurance Corp. from writing new auto insurance policies in the state until the company complies with subpoenas sent by state regulators in October.
Allstate wrote nearly $2-billion worth of auto insurance in Florida in 2006, the last year for which statistics are available.
McCarty had lost his patience the day before that with Allstate’s obfuscating, delaying and refusing to turn over financial records as McCarty’s office investigates how it pays homeowners’ claims. You can download the original subpoena here. Gov. Suntan, a longtime critic of Big Insurance, got a boot in as well:
“They’ve been horrific in their corporate ethic in terms of not responding to the great reform the Legislature passed last year,” said Gov. Charlie Crist, a frequent critic of the property insurers in the state. “I’m of the belief that they are probably violating the law. It’s greedy and it’s wrong.”
All I can say is: About fuckin’ time.
The insurance carriers have been sucking this state dry for decades, wanting a guarantee of making money by dropping homes anywhere near the water that they might have to pay claims on, while writing policies like auto in which they make a very nice margin. The private insurers dumped so much of their risk onto the open market that the state was forced to expand its own Citizens carrier to pick them up, as well as passing legislation to put taxpayers on the hook for a larger share of a catastrophic fund that would pay claims in the case of hurricane hits or other natural disasters.
But that wasn’t enough for Big Insurance. While the Times account was a tiny bit heavy on the drama, the Trib’s account was parroting the Big Insurance’s spin:
Regulators’ brash move to boot Allstate Corp. out of Florida’s future auto insurance market sharply raises the stakes in the state’s investigations of additional homeowners insurance companies and how they set their rates.
Insurance Commissioner Kevin McCarty said the state would “hit them where it hurts” in going after the company’s lucrative auto business, even though it was Allstate’s homeowners’ business that was under investigation.
Wednesday’s move was criticized by industry insiders and some lawmakers as politically motivated grandstanding by an ally of a populist governor. With a handful of additional homeowners’ providers either under investigation or being asked to send executives to testify under oath in Tallahassee, however, the state says it has sent a clear message.
“Brash?” Various definitions for that word include ideas such as being “rude, noisy, and irreverent.” Not sure McCarty was any of those, or that he was, as the Trib quoted unnamed lawmakers and industry insiders as claiming, he was “grandstanding” on behalf of the Gov.
Now, I acknowledge some anger and bias here. I got notice before Christmas that my homeowners insurance carrier, State Farm, is dumping me like Vince Vaughn ditched Jennifer Aniston. State Farm had dropped homes within 1 mile of the Gulf waters previously, but now it is applying that 1-mile buffer to all waterways, including Tampa Bay. I live two blocks off the Bayshore in Tampa, so bye-bye State Farm. I’m not alone, and I don’t feel all that bad. I knew it was coming some day.
But the Allstate thing is the last straw. I like state Rep. Rick Kriseman’s idea on how to deal with this: Let Citizens fully compete with the other insurance companies. And tell those insurers that if they don’t want to write homeowners’ policies to anyone in our state, then they can take all their freebie calendars and refrigerator magnets and get the hell out of Florida entirely. No more cherrypicking; no more writing auto but flipping the fiscal finger to homeowners.
If the state is going to be in the insurance business, it should get in it to win. Only then, with real competition, will the insurers be forced to do what is right. (and it’s too bad this Allstate-hatin’ website doesn’t appear to exist anymore.)
