Allstate Insurance Company has been ordered to pay a record $750,000 fine for improper rate increases and policy changes affecting tens of thousands of Marylanders.
Maryland Insurance Commissioner Ralph S. Tyler announced the fine, the largest the Maryland Insurance Administration has ever imposed against a property and casualty insurer, against Allstate for violating state laws about how it notifies consumers of changes and files notice of those changes with the agency.
“It is very simple,” Tyler said in a statement. “Here we have multiple compliance violations, and Allstate moved too slowly to correct the problems. Allstate was put on notice and fined more than a year ago for similar compliance violations.”
Allstate and its affiliates, including Encompass companies, did not properly notify customers of 15 percent or greater car insurance rate increases, dropping earthquake coverage and other changes to auto and homeowner policies, according to the Maryland Insurance Administration.
Allstate previously paid $18.6 million restitution to Maryland consumers forsimilar violations.
An Allstate representative could not be reached for comment.
In all, Allstate sent three notices that did not comply with Maryland Law, according to Tyler?s order: notices of premium increases for auto policies, renewal notices for homeowners? policies and a required annual statement of coverage for homeowner?s policyholders. Allstate also instituted a 3 percent deductible on cyclone coverage and dropped earthquake insurance from some policies without filing the changes with the MIA, as required by law.
Encompass issued 35,915 new and renewal homeowner policies this year without a mandated notice of exactly what the policies cover and exclude, according to the order.
“Consumers have basic rights to be informed about their coverage and changes that the insurer may make,” Tyler said. “Otherwise, there is no reasonable way for them to make informed decisions about what coverage they need and what company can best provide it.”
The Allstate companies involved include Allstate Insurance Company, Allstate Indemnity Company, Allstate Property and Casualty Insurance Company, Encompass Indemnity Company and Encompass Insurance Company of America.
