A Florida appeals court ruled that state insurance regulators could ban Allstate from writing new insurance policies until the company complies with a subpoena. Regulators believe the insurer is gouging consumers in hurricane-prone areas with exorbitant rates. [AP]

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  1. azntg says:

    Good to see that Florida’s court agrees that insurance is a self-fulfilling rip off scheme.

  2. Well, it’s more to prevent them from writing the more lucrative policies while dicking over home owners in the state.

    Honestly, if you are writing AUTO coverage in a state you should be responsible for home/property policies as well. Thank god the housing market crapped on itself here, my premiums have stopped jumping up by 50% each year.

  3. ViperBorg says:

    ’bout time.

  4. Falconfire says:

    @rainmkr: The fact that most states dont require that is what screwed over Jersey for the longest time.

    Insurance companies refused to do business in NJ because it required them to cover everything, and most didnt want to do auto coverage in the state. So in the end NJ suffered with much higher premiums from the few insurance companies who would actually insure drivers on top of homeowners.

    Only within the last 10 years are they coming back into the state.

  5. unklegwar says:

    So, instead of putting the burden on the higher risks, where it belongs, they’ll end up spreading the pain our across all of their customers. So some guy in montana will see his rates go up to cover the hurricane liabilities because the state won’t let the company apply the surcharges to just the risky ones. How is THAT good?

  6. dweebster says:

    Allstate screwing people – this is news?

  7. SacraBos says:

    @unklegwar: I agree. For the most part, most homes are going to have equivalent risks for fire, theft, accident. Flood insurance is usually separate depending if you are in a flood zone. Hurricane zones should also be separately priced, since the average insured home is not in a hurricane zone. If you can’t afford to insure the home, maybe living on the beach around the Gulf Coast isn’t a good idea. And maybe the same goes for fire insurance around California, too…

    Kind of like Katrina. I’m sorry about all the homes that flooded, but when you live in a below-sea-level bowl of swamp-land that’s a stones throw from the ocean, total loss by flood isn’t an “if”, it’s a “when”.

  8. “Um, Hi, I live in a lake. I should be paying the same in flood insurance as someone in Arizona!”

    I swear… I’m not saying you shouldn’t live on the coast, but if you’re the only one costing an insurance company money, you better be able to pay with an arm and a leg.

  9. zarex42 says:

    So people are complaining that people at a higher risk of tornadoes are paying more for tornado insurance? Why is this a problem, exactly?

    I’d be much more upset if I (in a non-tornado prone area) had to pay more for my insurance in order to support those living with higher risk. THAT seems like the real crime to me.

  10. FLConsumer says:

    @SacraBos: I mostly agree with you, but with one exception — the insurers almost never look at the actual house/structure when pricing. My condo building was built to withstand hurricanes with minimal damage. Went through Charley in 2004 where the anemometer on top of the building got ripped off at 130mph, Wilma in 2005. Charley broke 1-2 windows out of the thousands of windows in the place, Wilma tilted over a couple of trees and snapped one palm tree in half. That’s it. The rest of the island did NOT fare this well. After Charley there was a rather large portion of another condo complex’s roof in our courtyard, complete with aircraft warning beacon still attached. That particular building was ~1/4 mile away.

    Our insurance rates tripled. Why should I be penalized because those around me don’t build appropriate structures for the environment they’re in? It’d be illegal to build a structure with a roof that can’t handle the snow load in Minnesota, so why do we allow buildings in tropical areas that are unable to withstand hurricanes? Don’t even get me started on trailer/mobile homes.

    On some of my commercial property, we’ve decided NOT to get hurricane insurance. When the structure itself would only cost about ~$200k to rebuild, paying $40k/year for hurricane insurance on top of $10k for general building insurance doesn’t make sense. Self-insuring on this one. Given that the building’s been there since ~1940 and been through all of the major hurricanes the area’s had, I have a feeling it’ll probably still be around in another 5 years ($200/$40k/year=5 years).

    ALSO, it’d be different if the insurance companies actually PAID hurricane damage claims when they are made. 4 years later I still see the occasional news story about insurance settlements finally being paid out from 2004’s Charley.

  11. SacraBos says:

    @zarex42: Given that tornadoes have happened all over the place, that’s not so much of a concern. But living in TX (and previously OK), I’m sure our rates for hail damage and such are higher than other places that don’t have our level of severe storms. Though actually, except for hail damage, the risk isn’t that much higher.

    @FLConsumer: I’d have no problem with the structure being evaluated as part of the risk assessment. Although, rather than investigate every building, it probably is determined by the strictness of the local building code and the age of the building (and the code at that time). I think the local building codes in hurricane zones could have a huge impact in insurance costs plus damage avoidance by having stricter codes – but could be unpopular.

    Maybe you could get the insurance company to actually pay your claim by taking them to arbitration??? Then again…

  12. Mr. Gunn says:

    SacraBos, et al.: Homes are built differently in those areas, too. The infrastructure to protect the city is different in a coastal town than in a house in Montana. So we’ve already paid more in the cost of the house, local taxes to support the infrastructure, and to meet different code requirements.

    Different places have different kinds ofrisks, but as long as the appropriate measures are taken, the actual exposure should be similar, and insurance should reflect that.

  13. Mr. Gunn says:

    SacraBos, et al.: Homes are built differently in those areas, too. The infrastructure to protect the city is different in a coastal town than in a house in Montana. So we’ve already paid more in the cost of the house, local taxes to support the infrastructure, and to meet different code requirements.
    Different places have different kinds ofrisks, but as long as the appropriate measures are taken, the actual exposure should be similar, and insurance should reflect that.

    See, this stuff is complex and multilayered, which is why I’ve lost patience with people saying ill-considered things like “it’s your fault for living in a flood zone”, as if they should have known to not trust the decades of assurances from the Corps of Engineers that the levees were safe, and should have known that the insurance companies would try to dick them over by denying claims any way possible.

  14. Mr. Gunn says:

    [last part of my comment got ate]
    This kind of stuff is actually complex and multilayered, so people saying things like “it’s your fault for living in a flood zone” just sound stupid.

    People believed the decades of assurances that the levees were safe, and they believed that their decades of paying for flood and hurricane insurance actually meant that they would get reimbursed for their covered loss. There’s plenty enough blame to go around, but you can’t fault people for playing by the rules and trusting that the system would actually work.

  15. Mr. Gunn says:

    OK, that’s weird.

  16. The Porkchop Express says:

    @SacraBos: And Tornado prone areas, and snow storm areas, and earthquake areas. Almost all areas have their own little destructive force that other areas don’t. For years Florida has been paying premiums with out having hurricanes, and probably paying for some earthquake claims or hail claims.

    Anyway, I like that the state isn’t just bending over to Allstate….this time or yet.

  17. Greeper says:

    I’m not sure I understand the concept of “gouging” in an open, free market and in non-emergency conditions. A private insurer should not be forced to take risk it doesn’t want. If a consumer doesn’t want to pay the requested rate, then he should go elsewhere. Businesses should be able to charge what they want in free societies.

  18. FLConsumer says:

    @SacraBos: That’s exactly the blind application the insurance co’s currently apply and exactly what I have an objection to. The building is 35 years old yet exceeds all current building codes. Not that building codes here are anything decent.

    @Greeper: When you’re REQUIRED to have insurance and all of the insurers are raising rates together, it may not be gouging but it certainly is price-fixing. Not only did my S. Florida insurance go up after the hurricanes, but so did insurance on some property I have in Tampa. Tampa’s not seen a hurricane since 1926. Is Tampa any more likely to get a hurricane now than it has been the past 80 years? Nope. But they’re raising the rates regardless.

  19. ELC says:

    @unklegwar: totally agree. shouldn’t people in risker areas pay more? Isn’t that what the free market is about? I’m tired of paying for people who don’t even have insurance, but still live below sea level (yes, I’m looking at you idiots in New Orleans).

    Insurance companies got hit HARD with those hurricanes. They don’t just take all of that money and pile it up under their mattresses for years and years so they can bail out 1000s of homeowners.

    People who live on a dangerous coast, or in tornado alley, or below sea level, etc SHOULD pay more. I don’t know how much more, but it should be more than I do when I live in the center of the country away from this junk.

  20. Sudonum says:

    @unklegwar: @SacraBos:
    You may not be aware, but the source of this lawsuit stems from the fact that Allstate, State Farm and their ilk stated that they could/would lower the premiums in Florida if they could get cheap re-insurance rates. The State of Florida went in the the Re-Insurance business in 2006. Rates have not changed. That coupled with the fact that there have been no major payouts since 2005 by any insurance company has piqued the Florida Insurance Commission’s curiosity. Also as part of this little game, Allstate has refused to sell anything other than automobile policies. The State Legislature passed a law against this. Allstate refuses to comply.

    I’m not saying the State is right or wrong. However they did what the insurance companies asked them to do so they could lower rates. Rates did not change. And Allstate is in violation of the law regarding ‘cherry picking”. A law that they have not been able to get overturned.

    And lastly, insurance company profits in 2005, the year that they had historic payouts due to Katrina, Rita, and Wilma was also a record year for insurance company profits. I’m getting a little tired of hearing that the rates in the Midwest are rising because of payouts along the coast.
    [www.buzzflash.com]