ALLSTATE ENTERS INTO $71 MILLION SETTLEMENT WITH STATE OF TEXAS

On Monday, the Texas Department of Insurance (“TDI”) announced that it has entered into a $71.3 million settlement with the second largest home insurer in Texas, Allstate Texas Lloyd’s Insurance (“Allstate”). The investigation by TDI arose out of allegations that Allstate overcharged policyholders for homeowner’s insurance policies dating back to 2004.

As a result of this settlement, Allstate will issue $71.3 million in refunds, credits and rate reductions to Texas customers. Homeowners who purchased new or renewal policies between December 1, 2004 and April 23, 2006, will be entitled to refunds totaling almost $37 million. Allstate also agreed to credit or refund policyholders 3 percent for policies written between August 20, 2007 and June 1, 2008, and to reduce homeowners rates for Allstate customers by 3 percent statewide for new and renewal policies written for one year beginning on June 2, 2008. Finally, Allstate agreed not to increase homeowner premiums for that same one-year period, absent “extraordinary and unforeseen circumstances.” TDI estimates that this settlement could affect as many as 700,000 policyholders due to the fact that Allstate covers nearly 15 percent of the Texas market.

Former policyholders who are eligible for the refunds described herein should receive checks directly from Allstate. Current eligible policyholders should receive refund checks or credits on their policies. All refunds and checks are to be issued no later than November 1, 2008.

It should be noted that this settlement does not include policies issued by Allstate Fire and Casualty Insurance Company.