In a blistering report, the Consumer Federation of America criticizes AllState Insurance, accusing the carrier of unjustifiably raising home and automobile insurance rates relative to the amount paid out in claims, using questionable practices to settle claims, and attempting to shift costs to taxpayers.
Allstate is certainly not the only insurer pursuing these anti-consumer practices, but it has been in the vanguard in developing and implementing many of them, said J. Robert Hunter, CFAs Director of Insurance and former Texas Insurance Commissioner and Federal Insurance Administrator.
A CFA report, entitled The Good Hands Company or a Leader in Anti-Consumer Practices? found fault with Allstates home and automobile insurance practices. The report claims company profits are rising because of its conscious efforts to deny consumer claims.
It says Allstate was one of the first major insurers to adopt claims payment techniques designed to systematically reduce payments to policyholders without adequately examining the validity of each individual claim, such as an automated payment system called Colossus.
The report claims AllState mistreated its customers in the wake of Hurricane Katrina, dropping coverage for hundreds in many coastal areas around the country.
In 2005 and the first half of 2006, CFA says Allstate abandoned thousands of Floridians it had insured, dropping about thirty percent of its business in that short period of time.
The anti-consumer trends that Allstate has often been a leader in implementing do not appear to be justified by any increase in financial risk borne by property-casualty insurers, said Hunter.
In fact, a detailed analysis of the investment performance of Allstate and other property-casualty insurers shows that they represent a below-average risk for investors, as measured by standard measures of risk for investment," He said. "Allstate has, indeed, had remarkable results for its investors, returns that are well above what is required for this low-risk insurer.
