Article Courtesy of The St. Petersburg Times

By ROBERT TRIGAUX
Published  January 8, 2007

State Farm proposed a 20 percent rate reduction for its residential homeowners, an average annual $164 in savings, in the state amid pressure by the insurance commissioner to press insurers into using strong industry profits to lower fees.

This is a true event that happened last week. It just did not happen to occur in Florida .

It took place in California , a state that seems to have enough clout and citizen interest to tell insurers they can't keep raising homeowner rates, claiming they are poor, while their parent corporations tout their banner financial years to Wall Street and shareholders.

California 's insurance commissioner had pressured insurers to justify their homeowners rates after a study found that the carriers were not cutting premiums, even though fewer claims had been filed in recent years.

So, insurance industry, which is it? Destitute without another rate hike? Or so flush that stockholders are applauding? It's not as if Floridians are blind to such two-timing.

Perhaps newly elected Alex Sink, who last week became the state's chief financial officer, will flex some oversight muscle that apparently had grown flabby under former CFO Tom Gallagher.

Consider Allstate. Last week it said it was not renewing 106,000 homeowners in Florida , part of the You're-In-Good-Hands insurer's ongoing cutbacks in the Sunshine State . Even beyond Florida , Allstate is in a general "woe is me" retreat from insuring near-to-coast properties from Texas to New England .

That's the message Allstate consistently sends the public: Mother Nature is mad and we have to cut back coverage and raise rates to endure her wrath.

Here's a slightly different message Allstate offers to Wall Street and shareholders: In its most recent quarterly earnings report, Allstate posted a $1.16-billion profit. Let's listen in on the remarks recently volunteered by Allstate chief Edward Liddy at a financial services conference sponsored by Wall Street giant Goldman Sachs:

"In just over a decade, Allstate's annual revenues have risen from $23-billion to $35-billion, and our market cap has increased from just under $20-billion to about $40-billion ...

"At the same time, we have paid out more than $6.6-billion in dividends at an average annual increase of just over 12 percent. And our total return to shareholders has doubled the S&P 500 over that 10-year period."

Those are hardly the words of an insurance executive suffering substantive effects of Florida 's hurricanes. Take heed, Florida legislators, when you convene in "special session" to address our insurance debacle.

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