Allstate auto insurance rates questioned

Oct 08, 2008 (Detroit Free Press - McClatchy-Tribune Information Services via COMTEX) -- ALL | Quote | Chart | News | PowerRating -- Michigan's insurance consumer advocate is asking the state to hold hearings on Allstate Insurance Co.'s auto insurance rates.

Melvin Butch Hollowell wants insurance commissioner Ken Ross to look into Allstate raising auto insurance rates after saying that Michigan's drivers were among the safest in the country and had reduced accidents for several years in a row.

The newest rates the insurance company filed with the state -- which went into effect July 28 -- included increases of 5% to 7%.

Hollowell questioned the legitimacy of those hikes based on the "Allstate America's Best Drivers Report" released July 1. The report says that between 1996 and 2006, Michigan drivers had 9,000 fewer serious accidents, a 54% reduction.

In addition, four cities -- Sterling Heights, Warren, Detroit and Grand Rapids -- ranked in the top 10 in accident reduction between 2005 and 2007. Flint was ranked as the most improved city.

The insurance company said the report was wrong.

Allstate said that it had miscalculated accident rates, which it bases on property damage claims. It failed to take into account that Michigan is a no-fault state and because of that, did not count accidents like other states, said David Field, regional counsel for Allstate.

The new report ranks Michigan drivers among the worst in the country.

Hollowell said Tuesday that Allstate was willfully manipulating numbers and that "claims data from Michigan and its revised report is a violation of the state's Unfair Trade Practices Act and the rate-making section of the state's Essential Insurance Act."

Hollowell said he will ask Ross to hold hearings to prevent further rate hikes, which he believes are imminent.

"What we are saying is that based on this new report, we think they will raise them again, and that it might not be so far in the future," Hollowell said.

Contact MARGARITA BAUZA at 313-222-6823 or mbauza@freepress.com.

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