The Dallas Morning News reports that Allstate Insurance Company has reached a settlement agreement with the Texas Department of Insurance that will allow Allstate to keep more than $19,000,000 in premiums it allegedly overcharged Texas consumers. The settlement agreement does require Allstate to repay more than $51,000,000 in overcharges. Here are excerpts:
Allstate Insurance agreed Monday to refund $51.6 million to Texas
customers it overcharged for homeowners insurance, but the company will
not have to return another $19.2 million in overcharges under a
settlement with state regulators.The agreement between the
insurer and the Texas Department of Insurance – which resolves a
long-standing legal dispute – also calls on Allstate to reduce current
rates by 3 percent and leave those premiums in effect at least one year.Allstate policyholders with the company since the end of 2004 will see
an average refund of about $80, which will be mailed by Nov. 1.
Customers no longer with the insurer but who had policies in 2005 and
the first half of 2006 will get an average $50.Nearly 700,000 current and former policyholders are affected.
While state insurance officials insisted that the settlement is fair
for Allstate customers, advocates for consumers accused the insurance
department of "playing politics" with the "hard-earned money of Texas
homeowners.""The agreement is a positive step for the Texas
market and provides rate reductions and refunds for a substantial
number of Allstate policyholders in Texas," said state Insurance
Commissioner Mike Geeslin, who signed an order affirming the settlement
on Monday.Alex Winslow of Texas Watch, a consumer group, strongly disagreed with the commissioner’s decision.
"Texans are sick and tired of half-baked settlements that allow
insurance companies to pad their bottom lines without meaningful rate
reductions," Mr. Winslow said."Today’s settlement is like a
schoolyard scuffle where TDI [the insurance department] is the kid who
cries uncle and the insurance companies are the bullies who run off
with the money," he said. "Only this time it isn’t milk money and it
isn’t chump change – it is $20 million of hard-earned money that
belongs to Texas homeowners."
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