Allstate Ordered To Give Refunds in Texas

By Janet Elliott
Houston Chronicle

Allstate, which last month reduced homeowners insurance rates 4.8 percent, was ordered Monday to refund $60 million to its customers.

Insurance Commissioner Mike Geeslin signed the order, which also requires an additional 0.2 percent reduction in current rates. The action was the latest step in a three-year battle over rates charged by the No. 2 Texas insurer.

Geeslin said the refunds reflect the amount overcharged since December 2004, including interest at an annual rate of 13.25 percent. Insurance department spokesman Jim Hurley said the refunds would cost the company $60 million.

Joe McCormick, Allstate's spokesman for Texas, said the company is reviewing the order and considering its options. He said that the 4.8 percent decrease was close to the 5 percent ordered by Geeslin.

"We need to maintain that balance between having a very competitive rate and also needing that rate to accurately reflect the risk and be adequate to pay future claims," he said.
McCormick noted that the company has decreased its homeowners rates about 15 percent since 2003.

In 2003, state regulators ordered most companies to reduce their rates. Allstate agreed to a 10 percent cut and said it would consider another 8.75 percent reduction a year later.

The insurer refunded $60 million in 2004 and offered to cut rates 1.3 percent. The Texas Department of Insurance rejected the filing and recommended that Allstate be penalized. The company appealed before a state administrative law judge. In March, two judges said Allstate's rates are excessive.

The company could appeal the order to a state district court in Travis County.

Source: Houston Chronicle (www.chron.com)

From Insurance News Net (www.insurancenewsnet.com)