OPINION: Allstate policies now in state’s hands

Apr 7, 2008

Naples Daily News--April 6, 2008
By MICHAEL PELTIER

TALLAHASSEE — In the world of insurance regulation, this was a big, BIG deal.

A Florida appellate court last week upheld the state Office of Insurance Regulation’s decision to bar Allstate Insurance Co. and its Florida affiliates from doing any more business in the state until they answer a few questions.

Well, more than a few. Try 196 pages of them.

On Friday, the 1st District Court of Appeal in Tallahassee upheld the agency, which suspended Allstate from writing new home, auto, marine and other insurance lines, contending it failed to comply with a subpoena issued in January to testify about its property insurance business.

The ruling won’t affect current Allstate policyholders, but prevents the company from writing any new business.

“It’s hard for me to contain my enthusiasm,” Kevin McCarty of the Office of Insurance Regulation told reporters in Tallahassee.

State officials were more than miffed last summer when Allstate requested increases of 41 percent despite legislative efforts to put Florida taxpayers more on the hook for devastating storms.

So state regulators wanted a little background information. Well, more than a little. The state sent a voluminous query to the state’s second-largest property insurer. Underwhelmed by the response, it subpoenaed company executives to provide more answers.

State regulators want to know Allstate’s discussions with fellow companies, rating agencies, industry groups and others to determine why the company asked for such a large increase in rates.

In response, Allstate sent a decidedly “Un-Dream Team” to Tallahassee.

In what soon became a farce, the executives from Allstate declined or were unable to answer virtually all questions posed by the insurance panel. The scheduled two-day hearing was ended after only a few hours.

Then things got feisty. Florida law left officials with few options.

They could fine the company $10,000 a day or suspend their ability to sell policies in the state.

Because the company already was paying $25,000 a day for a case defying another judge’s order, McCarty sought option two.

McCarty said the company continues to thumb its nose at the state’s request for information and recently sent a 196-page list of documents it wouldn’t release.

“The company’s actions have been contrary to the best interests of the consumer and they have acted in a way that jeopardizes the health and welfare of the people of Florida,” he said.

The agency plans to file papers today to get the court to clarify when the suspension begins.

McCarty said the suspension, which likely will take effect after a 15-day period in which Allstate can file challenges, would remain in place until the company turns over all documents in the case.

“They have created their own situation,” McCarty said. “They had an option to comply with the law. They had blatantly and flagrantly disregarded the law.”