Court Mistake Keeps Allstate In Business

Apr 22, 2008

Tampa Tribune--April 21, 2008

The Tampa Tribune

TALLAHASSEE – State Insurance Commissioner Kevin McCarty was one happy man Monday — for a few minutes, at least — after getting word that an appeal court sided with him in barring Allstate companies from conducting new business in Florida.

But his celebratory press conference was cut short with word that the court had quickly withdrawn the order "as it was issued due to clerical error."

"This is not one of those things you prepare for," McCarty said before departing a chaotic Tallahassee conference room, with additional reporters from around the state participating via telephone.

The glitch came as state insurance regulators and Allstate officials await a ruling by the 1st District Court of Appeal on McCarty’s order prohibiting 10 Allstate companies from writing any additional policies in the state, including lucrative auto lines. McCarty maintains that Allstate is violating state law by not complying with subpoenas for documents relating to how the company sets homeowners insurance rates.

Allstate is allowed to conduct new business while McCarty’s order is under appeal.

The Tallahassee appeal court upheld the insurance chief’s order on April 4, but the insurer filed for a rehearing, setting up the latest lull.

State regulators want to determine why Florida homeowners’ insurance rates, which were expected to drop after the state took on more risk in a 2007 special session, instead rose in some cases. They are investigating whether insurers, their trade groups, and rating agencies may have colluded to keep rates artificially high. Allstate was among three companies served with subpoenas in October seeking the documents relating to rate-setting.

The state maintains that it subsequently received tens of thousands of documents that were not in compliance with the subpoenas’ instructions. After expressing dismay at Allstate executives’ conduct at a Jan. 15 hearing at the Capitol, McCarty issued his order halting Allstate’s future business on Jan. 16.

The matter has been wrapped up in the appeal court ever since.

McCarty called Monday’s 5:15 p.m. press conference to announce Allstate’s business licenses would be yanked as of this morning. He described what he thought was the court’s official ruling as "a very important victory for our state," offered his empathy to agents affected by the freeze, and said he had already spoken with Gov. Charlie Crist, whom he said was "ecstatic."

The insurance commissioner was called briefly from the podium, then updated the crowd.

The appeal court quickly posted to its Web site another order stating, "The court’s order issued earlier this date denying … appellant’s motion for rehearing … is withdrawn as it was issued due to clerical error."

Allstate had issued an innocuous press release of its own, stating it was in the process of reviewing the decision and was "determining what options we will pursue moving forward."

The waiting game now continues until the Tallahassee court officially rules on Allstate’s motion for a rehearing on the matter. There is no timetable for a decision.

As bemused reporters pondered the development Monday night, one asked McCarty, "Do you feel like Emily Litella?" McCarty didn’t respond to the quip referencing the popular "Saturday Night Live" character whose signature line was, "Never mind."