Allstate is already well known for collecting exorbitant premiums and simultaneously refusing to pay reasonable claims to customers, forcing them instead to either endure years of litigation while their bills go unpaid, or settle for a fraction of the claims they deserve.
Evidence in Allstate company reports shows that the American insurance giant has also been fudging its numbers to appear financially stronger in the crumbling economy than it actually is.
According to The Washington Post, Allstate has made at least two “account changes” adding erroneous funds to their assets: one for $347 million and another for $365 million.
In the economic crunch, Allstate and other insurers have been asking insurance regulators to either let them operate with less of a financial cushion than before, or simply approve “account changes” that make the cushion they have just look larger. The regulators have been more or less amenable.
Allstate’s home regulator in Illinois approved one of the company’s accounting changes during the fourth quarter of last year, retroactive to Sept. 30, Allstate reported.
The company made the other change anticipating that the National Association of Insurance Commissioners would later endorse the approach, Allstate spokeswoman Maryellen Thielen said. Instead, the NAIC executive committee rejected the proposal on Jan. 29, leaving the question for individual states to resolve, Thielen said in an e-mail.
In a Jan. 29 conference call with investment analysts, Allstate executives said they already had regulators’ blessing.
“They look at it favorably because it’s indicative of the strength of the company,” Allstate Controller Samuel Pilch said when an analyst asked about the approximately $700 million of capital the company generated through accounting changes. – David S. Hilzenrath, The Washington Post
The blatant refusal on the part of regulators to responsibly regulate Allstate or any other insurer means that individual states will be given the power to approve or reject insurance companies’ accounting practices, determining how successful each company appears to the public and in turn, how the public chooses insurers. Companies will soon be reporting their financial standing differently from state to state, and the already confusing process of choosing and keeping an insurance company will become virtually impossible from the standpoint of a company’s financial health—and accordingly, its likelihood of actually covering you in the event of an accident.