Ban on Allstate stalls for now

Apr 8, 2008

Court to clarify if freeze immediate; insurer says state must wait

Paul Flemming
News Journal capital bureau
Pensacola News-Journal–April 8, 2008

TALLAHASSEE — Insurance regulators want to start the arm-twisting of Allstate immediately, and on Monday asked a court if it could.

Insurance Commissioner Kevin McCarty’s Office of Insurance Regulation Monday sought clarification of a 1st District Court of Appeal ruling that affirmed his power to shut Allstate out of doing new business in the state.

The ban came after McCarty said Allstate failed to turn over documents in January as part of a state effort to investigate Allstate’s property insurance rates, policy cancellations and business practices.

McCarty thinks his freeze on all new business should start with his big court win on Friday. Allstate officials say their reprieve from the sanction is still good until April 19, the deadline for the company to ask the court for a rehearing.

Allstate spokesman Adam Shores said Monday the company is still reviewing its options, but intends to seek a rehearing.

The prohibition, whenever it kicks in, would stop only new business.

It would not affect Allstate’s 2 million existing customers. Allstate could get back in business by producing requested documents and ending its "frivolous" objections.

When McCarty issued his order to halt Allstate from doing any new insurance business in the state, the company sought and won a temporary stay as it argued that regulators didn’t have the power to issue the moratorium.

But a three-judge panel of the appeal court on Friday said regulators could do just that in Allstate’s case, and on Monday McCarty’s lawyers pressed the issue to use the power the court granted it.

Tom Zutell, a spokesman for McCarty, said it’s unknown when or if the court will rule on the request for clarification.