October 7, 2008 - Michigan's Automobile and Home Insurance Consumer Advocate Melvin Butch Hollowell today announced that he has filed a formal complaint with the Office of Financial and Insurance Regulation (OFIR), asking for an investigation into Allstate Insurance Company.
Hollowell filed the complaint in response to a letter he received from Allstate, which addressed Allstate's wholesale revision of its annual "Allstate America's Best Drivers Report." Released in July, 2008, the report measures the time in between accidents, and ranked Michigan's drivers as safest in the United States. However, Allstate's September letter indicates that after reviewing Michigan's auto No-Fault approach to third party damage, Allstate lowered Michigan's rankings to the bottom quarter of its list.
According to the Allstate letter, the discrepancy existed because the report failed to incorporate Michigan's unique, lifetime, unlimited medical benefits into the calculations.
Hollowell is disputing Allstate's claims, stating that Allstate is manipulating its own data as a way to justify raising auto insurance rates for Michigan policyholders.
"Michigan's unique No Fault benefits have nothing to do with the amount of time between accidents or the safety of our drivers. And they have nothing to do with the fact that Michigan drivers led the nation with 9,000 fewer crashes between 1996 and 2006," Hollowell said. "It's transparent that Allstate wants to distance itself from its own Best Drivers report because it helps to prove their rates are excessive in Michigan."
In his complaint, Hollowell is asking OFIR Commissioner Ken Ross to investigate and hold a public hearing about whether Allstate has violated Michigan law by fraudulently altering data as a way to justify raising consumer insurance rates. He is also calling for an investigation of whether Allstate has reduced its premiums in light of fewer miles being driven by consumers caused by high gas prices. Hollowell has requested the Commissioner to impose all appropriate penalties.
J. Robert Hunter, Director of Insurance for the Consumer Federation of America and former Texas Insurance Commissioner, has authored an in-depth study of Allstate titled, "The Good Hands Company or a Leader in Anti-Consumer Practices?"
"Allstate has had a troubling pattern of anti-consumer conduct all across the country," Hunter said. "Thank goodness Michigan is demanding accountability from insurers, and looking out for consumers."
Allstate has released its Best Drivers report since 2005 as a way to boost the country's discussion on safe driving and to increase awareness of the importance of being tolerant and attentive behind the wheel. Since the 2008 report was issued in July, Hollowell has used the information extensively to illustrate the inequity of auto insurance rates in Michigan.
As insurance consumer advocate, Hollowell meets with citizens, consumer groups, experts, and insurance industry representatives in developing recommendations for needed reforms.
In her 2008 State of the State address, Michigan Gov. Jennifer M. Granholm announced the creation of a new automobile and home insurance consumer advocate position to fight for affordable, reliable, and fair auto and home insurance in Michigan. In March, the Governor appointed Hollowell as the State Automobile and Home Insurance Consumer Advocate, charging him with conducting hearings, receiving testimony from consumers and submitting to the Governor an annual report on his findings and recommendations for administrative, legislative, or other corrective actions that would positively affect the interests of automobile insurance and home insurance consumers.
Hollowell works to educate consumers on how to protect themselves against predatory or illegal insurance practices and coordinate advocacy and educational efforts with non-governmental consumer advocacy entities and other organizations.
Read more Michigan Department of Labor & Economic Growth press releases.
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