Tuesday, February 5, 2008

Allstate's prophets seek more profits in Florida

Allstate recently tried to push through a 42% premium rate increase on its Florida customers, using as its justification unscientific wild guess about future weather conditions, as this article reports:
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.

Kudos to the article writer for noting that the link between warmer waters and hurricane frequency and intensity has not been established.

Allstate's Florida customers really ought to ponder whether they really are "in good hands".