chapter 10 – in talks
the latest in the Tuesday TP
The Louisiana Department of Insurance has granted Allstate a second extension to gather data about the number of homeowners whose wind and hail coverage was dropped on technicalities, and will meet with the state’s second-largest insurer later this week.
Warren Byrd, the insurance department’s executive counsel, said Allstate asked for an extension until Feb. 1 so the company could figure out exactly how many longtime customers may have been affected by an administrative switch from Allstate Insurance Co. to Allstate Indemnity Co. on a good-credit discount that cost them their all-important coverage against hurricanes and hailstorms.
The suburban Chicago company also requested a meeting to discuss its views and why the department believes these policies were improperly canceled.
“I thought that was wise thing to do. If we can resolve something in a potentially positive way, I think we’re a little further down the trail,” Byrd said. “We are meeting, we are progressing. It’s a positive step.”
In December, the insurance department had ordered Allstate to reinstate the policies of longtime customers whose wind and hail coverage was dropped. The initial deadline of Jan. 18 was extended until last Friday at Allstate’s request.
The insurance department previously has clashed with Allstate twice: in summer 2006, the company wanted to drop 30,000 policyholders in south Louisiana in a move that the department contended was illegal; and in spring 2007 the department forced Allstate to scrap a drive-by property inspection process that resulted in nearly 5,000 people getting their policies canceled, ostensibly because their homes were abandoned or in disrepair, even though many had actually repaired their homes.
In both cases, the battles were contentious — the first time, the insurance department hired outside legal counsel in preparation for going to court, and the second time, Allstate defied Insurance Commissioner Jim Donelon’s orders and did take the matter to court before withdrawing the case and working things out.
Byrd said he wondered whether the company’s seemingly conciliatory posture had anything to do with Florida.
The company has been in a standoff since Jan. 15 with Florida Insurance Commissioner Kevin McCarty, who barred Allstate from selling any type of new insurance policies until it complied with a subpoena for documents about how it conducts business. McCarty’s order has been stayed by a court while an appeal is pending, allowing Allstate to sell policies for now.
On Monday, Allstate turned over widely coveted material about advice that it received from international consulting firm McKinsey & Co. on how to handle claims to boost its profitability, but McCarty’s office said it’s not enough for him to withdraw his efforts to reinstate the suspension.
With the company taking a public relations beating in Florida, Byrd wonders whether the company may be treading more carefully in other states. “They could decide this is not another incident they want to raise with the department,” Byrd said. “I think we’re progressing.”