Wednesday, February 6, 2008

Allstate blames global warming for rate hike

From WTVT (Tampa Bay):

Now we know why Allstate wanted a 42-percent increase in home insurance rates. The company is using an unapproved model that factors the growing threat of global warming.

Last month, company executives objected to a Senate subpoena. The state tried to suspend their license, and Governor Crist threatened to sue them.

Now Allstate executives said they aren't price gouging. They say they're just very concerned about climate change, and trying to make sure they keep rates in tune with the growing threat. The ocean is a hurricane's fuel tank. Warmer waters could mean more and stronger storms (though this is currently a subject of scientific debate).

"It's my professional opinion and others at Allstate, it appears that the increase in sea surface temperatures and the near term effect of hurricanes is something that is real and is a need that we need to consider for the protection of our insurers," said Allstate Floridian's Ryan Michel.

Allstate executives also said they took a beating in Florida from the hurricanes of 2004 and 2005.

"The Allstate Floridian companies paid out a million dollars more in claims it received in premiums in 2004 and 2005 totally exhausting its capital," said Allstate Floridian CEO Joe Richardson, "If not for a substantial infusion of capital from Allstate Insurance Company our parent company in the form of a not, Allstate Floridian would have been insolvent at that time."

The past two years have been calm, and the property insurance industry scored record profits.

Regulators tried to suspend Allstate's license for refusing to testify. A judge let them keep it until the case is worked out in court.