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.”