Florida agency outlines case against Allstate

Feb 20, 2008

By Julie Patel
South Florida Sun-Sentinel–Feb. 20, 2008

State insurance officials outlined why they want to bar Allstate Insurance Co. and its affiliates from selling policies in Florida in a written complaint to the company. Allstate’s recent actions demonstrate "a continuing attempt to improperly subvert, manipulate, and undermine the regulatory process," according to the complaint sent late Monday by the Office of Insurance Regulation.

Allstate, Florida’s fourth-largest insurer, failed to provide most of the documents demanded by the state for a hearing last month on the company’s property insurance pricing practices. That triggered scathing criticism from Insurance Commissioner Kevin McCarty and swift action.

In the first move of its kind, the state suspended 10 Allstate companies from selling all new insurance policies. Allstate appealed to the First District Court of Appeal and a judge lifted the suspension. Now Allstate plans to fight the state’s continuing effort to suspend the company from generating new business until all the documents are in by asking for an administrative hearing, Allstate Floridian spokeswoman Deb Clouser said Tuesday. The process could take up to six months or longer if Allstate appeals conclusions made by the judge and state officials, said Ed Domansky, a spokesman for the Office of Insurance Regulation.

The state’s action against Allstate is part of a long-simmering feud between insurers and state leaders over rates. Late last year, Gov. Charlie Crist appointed a team of attorneys to determine whether to sue property insurers. And state senators have been holding hearings with insurance executives testifying under oath to find out why insurers’ rates haven’t dropped after legislators expanded a program early last year offering cheaper backup coverage to insurers.

The Senate Select Committee on Property Insurance Accountability held a hearing Tuesday examining the relationship between insurers and the storm risk-predicting companies and backup insurers they hire.

Senate Minority Leader Steve Geller, D- Cooper City, co-chairs the committee and said he’s doubtful the committee will be able to meet again before the annual legislative session starts in March, as some senators had hoped.

But the committee plans to make about a half-dozen recommendations about insurance accountability in the next few weeks, Geller said. Ideas floated so far include clarifying state law about insurers using unapproved risk-prediction methods and extending a moratorium on allowing insurers to go to an arbitration panel if they disagree with regulators about rates, he said. A more controversial idea is allowing the state’s backup coverage to be fully backed by the state and its general fund in case it ever has trouble selling bonds.

Meanwhile, the complaint filed by McCarty’s office to Allstate acknowledges that the state has now received 49 boxes of documents from the insurer, including 33 that were received after the suspension took effect. McCarty’s office issued a statement Tuesday saying it is still pushing for the suspension because Allstate hasn’t provided all the documents and is claiming some are considered "trade secrets."

The issues McCarty’s office claims in the complaint include:

Allstate engaged in "unfair and deceptive" business practices when it falsely labeled some documents as trade secrets, even when they were already public.

The companies did not cooperate with a state investigation by failing to submit documents.

Executives of some of the Allstate companies didn’t actually review rate filings — or documents companies are required to submit to the state showing their methods for determining rates — as required by state law. Joseph Richardson Jr., chief executive officer of several Allstate companies, testified at one of the Senate hearings that he had not read the company’s rate filings last year, only the executive summaries, which did not include proposed rate changes.

Clouser said that Allstate is complying with regulators’ records requests: "We’re confident we’re continuing to provide them with the necessary materials."