Exclusivefocus - National Association of Professional Allstate Agents ...

long-resolved divorce, that its client wasnot responsible for the accident, despitehaving clearly violated the right of way, adefense “used in many, if not most casesby Allstate.” Their offer was $1,500. Anarbitrator awarded over 30 times Allstate’shighest offer.• July 2008. Allstate lost its appeal ina Missouri Court of a $16 million judgmentagainst it for not settling a $50,000claim on an auto insurance policy. “Allstate’sfailure to recognize the severity ofthe ... injuries and the probability thatthe claim would far exceed ... policy limits;its failure to investigate the claim andrespond to the demand in accordancewith insurance industry standards and itsown good faith claim handling manual... are all circumstances supporting a reasonableinference that Allstate’s refusalto settle was in bad faith,” wrote JudgePaul Spinden in the decision• July 2008. Allstate settled a badfaithcase that drew national attentionand prompted the judge to levy finesagainst the insurer topping $7 million.Both sides declined to disclose the termsof the settlement. This is the court wherea daily fine of $25,000 was levied forAllstate’s refusal to comply with a courtorder to produce, among other things,the McKinsey documents.Regulatory:• August 2008. Allstate finally settleswith the Florida Office of InsuranceRegulation (OIR) after losing aprolonged struggle to avoid turning overdocuments requested by the department.The documents (frequently referred to asthe McKinsey report), had been soughtfor several years by authorities in courtroomsthroughout the country. InsuranceCommissioner Kevin McCarty said“Allstate’s actions clearly evidence a continuingattempt to improperly subvert,manipulate, and undermine the regulatoryprocess, and such actions evidencea lack of trustworthiness on the part ofAllstate’s management, officers, and directors.”Finally, faced with an ultimatumto comply with the subpoena to surrenderthe requested information or loseits authority to transact any new insurancebusiness in Florida, Allstate cavedin. It also agreed to pay a $5 million fine,cut rates by 5.6 percent, not ask for a rateincrease for at least a year, forgive a $175million loan to its Florida subsidiaries,and write 100,000 new residential propertypolicies in Florida.• May 2008. The Texas Departmentof Insurance and Allstate reached an agreementto settle all outstanding litigation withrespect to homeowners’ insurance issuesthat date back as far as December 2004.Under the terms of the agreement, Allstatewill provide $71,300,000 in refunds, creditsand rate reductions. In the same month thecompany agreed to refund $51.6 million toTexas customers it overcharged.• February 20, 2008. Louisiana InsuranceCommissioner Jim Donelonfined Allstate $250,000, and ordered theinsurer to reinstate the wind and hailcoverage of several hundred customerswhose policies were dropped in disregardof a key consumer protections law. Allstateadmitted to no wrongdoing, sayingit disagreed with the department’sinterpretation of the law, and claimed itdecided to settle the matter “in recognitionof the catastrophic events of 2005,the continuing concern for its customersand as a gesture of ‘goodwill.’”• December 2007. The MarylandInsurance Commissioner announced afine of $750,000 – the largest ever imposedagainst a property and casualtyinsurer – against Allstate for failure tocomply with state laws regarding mandatorynotices to consumers and a requiredfiling with the Maryland Insurance Administration.State insurance officialssaid Allstate had already paid Marylandconsumers nearly $18.6 million in restitutionfor similar violations.Independent Authorities:• July 2007. A report by the ConsumerFederation of America (CFA) chargesAllstate with “Questionable claims settlementpractices, resulting in unjustifiablylow claims payments. Allstate was oneof the first major insurers to adopt claimspayment techniques designed to systematicallyreduce payments to policyholderswithout adequately examining the validityof each individual claim, such as an automatedpayment system called Colossus.Spring 2009 Exclusivefocus — 19