Allstate’s ban: 30 minutes

Apr 22, 2008

St. Petersburg Times--April 21, 2008

By Tom Zucco, Times Staff Writer

TALLAHASSEE — It could be the shortest suspension of a company in Florida regulatory history. Allstate Insurance Corp. was banned late Monday from selling any new insurance policies in the state.

For about 30 minutes.

In a bizarre twist even by Tallahassee standards, an appeals court denied Allstate’s request for a new hearing about 4:30 p.m., and then withdrew the ruling a half-hour later, citing a “clerical error.”

The court didn’t say what that error was. The original ruling contained only three sentences, each denying a motion Allstate had filed seeking to have the court look at the case again.

A clerical error would imply one relatively minor mistake. But regulators wouldn’t speculate.

If Allstate can’t write new policies, its losses could mount quickly. Allstate is no longer writing new homeowner policies in Florida, but auto insurance is by far the company’s biggest moneymaker. Last year, Allstate wrote an average of about $564,000 a month in new auto business in the state.

Allstate has been fighting the suspension since January, when Insurance Commissioner Kevin McCarty accused the company of not turning over documents key to a state investigation of the Illinois-based insurer. McCarty issued an order banning Allstate from writing new policies, but the company won a stay the next day.

McCarty wants to know whether Allstate colluded with rating agencies, hurricane modeling companies and trade associations to set homeowner rates. Regulators also want Allstate to explain why it needed a 42 percent rate increase last year, at a time when most other insurers were cutting rates.

Allstate insures 300,000 homes and 1.3-million cars in Florida. The company will still be allowed to renew policies, but unless the ban is lifted, its total tally of business is expected to shrink at least 10 percent a year.

After the first ruling was announced Monday, McCarty quickly called a news conference to praise the decision. He said Gov. Charlie Crist was “ecstatic” about the news, and that the ruling was a warning to other companies that choose to violate the law. McCarty also said Allstate had appealed the decision to the Florida Supreme Court, and that he was holding ongoing meetings with Allstate officials.

But as McCarty was finishing, Steve Parton, his general counsel leaned over and whispered to him. Something had just happened. The 1st District Court of Appeal had issued yet another order, one signifying the clerical error.

Allstate had slipped through the nets again.

“It’s one of those things,” McCarty said as the pens, microphones and cameras were stashed away.

Both sides say they expect to hear from the court again today.