Fla. to Allstate: Tell or don't sell

Article Courtesy of The St. Petersburg Times

By Tom Zucco
Published January 18, 2008

Kevin McCarty decided Thursday to throw the entire book at Allstate.

A day after telling Allstate to stop writing new auto insurance policies in Florida, McCarty, Florida's insurance commissioner, expanded his order to include all lines of insurance. As of noon Thursday, Allstate could no longer sell any new insurance of any kind in Florida, including auto, homeowners, medical malpractice, workers compensation, aircraft, and credit life and disability.

Allstate responded late Thursday by filing an appeal in district court in Tallahassee seeking an immediate stay of the order. Allstate may have a chance to argue its case as soon as this morning. In the meantime, the company says it has stopped writing new business in the state.

"The commissioner met with our lawyers, and it was determined the better decision was to apply the order to all new business," said Ed Domansky, a spokesman for McCarty's office.

The vast majority of business that Allstate writes in Florida, regulators say, is auto and homeowners insurance. The company's 1.7-million auto policies account for nearly $2-billion in annual premiums, or more than 75 percent of Allstate's total written premiums in the state. In second place and shrinking is homeowners insurance. Allstate had more than 750,000 property insurance policyholders five years ago; today it has less than 300,000.

The order requires Allstate to notify its 1,100 agents immediately and affects only the sale of new policies.

The order has no effect on current Allstate policyholders, who can renew their policies. Allstate also must continue to pay all fees and taxes on its remaining policies, and honor all current and future claims.

The core of the issue is the Illinois-based company's response to subpoenas, something regulators and lawmakers have described as arrogant and inadequate. Regulators want to know why Allstate didn't follow state law and lower its premiums for homeowners coverage. They also want to know about company guidelines regarding claims settlement.

The suspension will be lifted, McCarty said, when Allstate turns over the documents regulators want to see.

That's something Allstate believes it has already done.

"We believe we are in compliance with the Office of Insurance Regulation," said Allstate spokesman Adam Shores. "We have produced volumes and volumes of documents to them, and the process is still going on."

Shores could not say what kind of financial effects the suspension would have on the company.

"It depends on how this process plays out in coming days," he said. "We have asked for an immediate stay of the order, and I think they see the urgency in this."