Florida Insurance Commissioner Suspends Allstate Insurance Co.

Florida Insurance Commissioner Kevin McCarty announced Jan. 16 that he is suspending the certificate of authority of Allstate companies to write new insurance in Florida until they fully comply with the subpoenas served Oct. 16 by the Office of Insurance Regulation.

The decision by the commissioner follows Jan. 15 action when he abruptly halted the scheduled two-day hearing into the Allstate companies' reinsurance program and their relationships with risk modeling companies, insurance rating organizations, and insurance trade associations.

"In view of Allstate's ongoing, blatant disregard of our subpoenas, I have little choice but to take an action that will send a clear message about how seriously I am taking this issue," said McCarty. "Suspending their certificate of authority to write new business in our state should make my point.

"If Allstate is willing to pay $25,000 per day in fines to a Missouri court for its ongoing failure to provide similar documents, it's obvious to me that it will take more than a monetary sanction to get them to comply with our subpoenas."

Allstate was to have provided all appropriate company documents related to the above topics at or before the Jan. 15 hearing but failed to do so. Instead, the OIR received 51 pages of objections to the subpoenas.

In response, Allstate issued the following statement: "Allstate is committed to working diligently with the Office of Insurance Regulation to create solutions and ensure there is a healthy insurance market for Florida consumers.

"We were surprised at the OIR's actions yesterday and today based on our dealings with them over the course of several months and dozens of phone conversations. Since receiving the subpoenas, Allstate has produced nearly 40,000 pages of information and will continue to produce responsive documents to the OIR on a rolling basis. We have not yet received an order and are evaluating our options. At this time, it is not clear how this action will affect Allstate or the more than 1,100 Allstate agents in Florida who are small business owners and employers."

The suspension applies to Allstate Insurance Co., Allstate Indemnity Co., and Allstate Property and Casualty Co., and it only suspends the companies from writing new business in Florida.

Existing policyholders will not be affected. Allstate must continue to service them, and the companies must make all required statutory filings including, but not limited to, audited annual financial statements, quarterly financial statements, and rate filings.

"The duration of the suspension is up to them," McCarty said. "It will be lifted when I am satisfied that we have received each and every document we need to properly investigate the important issues before us.

"It continues to trouble me that Allstate has not complied with our subpoenas and is not willing to explain to us their relationships with rating agencies, modeling companies, and trade groups and how these relationships might have influenced the huge rate increases they have requested. This clearly cannot be in the best interests of Florida consumers."

This is the first time the OIR has suspended a company for failure to "freely" provide documents as required by Florida law. A copy of the subpoena is available to review.

"I applaud Commissioner McCarty for sending a clear message to Allstate companies and protecting Florida's consumers," said Florida Gov. Charlie Crist. "It is clear to me that Allstate must have something to hide if they are unwilling to comply with the commissioner's requests. This type of behavior is an unconscionable disregard for this process and their customers. I am grateful to Commissioner McCarty for taking this bold action and look forward to further progress through the Senate Select Committee's work next month."

Allstate Floridian Indemnity and Allstate Floridian Insurance Company have requested rate increases of 28.3 percent and 41.9 percent, respectively. Encompass Floridian Indemnity requested a 38.4 percent increase, and Encompass Floridian Insurance Company requested a 39.7 percent increase.

Source: Florida Office of Insurance Regulation, Florida Office of the Governor

Posted: Wednesday, January 16, 2008 12:00:00 AM. Modified: Wednesday, January 16, 2008 2:14:39 PM.

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