Court clears way for Allstate ban - St. Petersburg Times

After four months of court challenges and clerical errors, Florida insurance Commissioner Kevin McCarty was finally able Wednesday morning to force Allstate Corp. to stop writing any new insurance policies in the state until it hands over documents regulators say are key to an investigation into Allstate's rate-making practices.

"Floridians across our state have suffered due to the high cost of insurance," Gov. Charlie Crist said in a statement. "I applaud today's action by the 1st District Court of Appeal" — which affirmed the state ban on Allstate.

But Allstate has an out. Regulators said late Wednesday that they had received several draft affidavits from Allstate in which the giant insurer certified that it already has produced all the documents the state has requested. McCarty said he will lift the suspension if the affidavits meet his criteria.

"Allstate has agreed to cooperate," McCarty said. "When our office is satisfied Allstate has made all the documents available, I will immediately stay the suspension. Failure to do so will result in an immediate resumption of the suspension."

That's not likely, said Allstate spokesman Adam Shores. "We believe (the affidavits) will be acceptable to them," he said.

In the meantime, Allstate can't write any new business in the state, including its lucrative auto line. Last year, Allstate wrote an average of about $564,000 a month in new auto business in Florida. The company sells about 3,500 new auto policies a week statewide.

The state's fourth-largest property and second-largest auto insurer, Allstate still has another large hurdle in front of it.

In a separate action here, the Illinois-based insurer faces possible suspension at a June 16 administrative hearing regarding its 2007 rate filing. The company is accused by Florida regulators of failing to comply with subpoenas, falsely asserting trade secrets and false certification of its filing.

A decision in that case will be made by an administrative law judge and could be appealed to the 1st District Court of Appeal, the same court that Wednesday affirmed McCarty's order.

"Allstate's willful, indeed potentially criminal, failure to comply with its disclosure obligations," Judge Paul Hawkes wrote in the court's opinion, "has prevented (regulators) from adequately investigating its reasoned belief that Allstate is systematically defrauding its policyholders."

Allstate's Shores said an appeal of Wednesday's ruling to the Florida Supreme Court is "definitely one of the options'' his company is considering.

Crist and members of the Florida Legislature have bashed Allstate in recent weeks for everything from dropping half a million policyholders over the last five years and using unapproved hurricane risk models to set rates, to possibly colluding with rating agencies and trade associations. The company recorded profits of $4.6-billion in 2007.

But the key charge has been that Allstate circumvented a 2007 Florida law that requires insurers to lower their rates. Before the company withdrew the request this year, Allstate had asked for a 42 percent average statewide rate hike, the largest increase of any major insurer.

Even if the suspension lasts a few days, it will hurt the state's 1,100 Allstate agents and nearly 4,000 support staff, said Jim Fish, executive director of the National Association of Professional Allstate Agents, a group not affiliated with Allstate Corp.

"The agents are going bananas," Fish said. "They've been sitting on the edge of their seats, and now they'll be put back in limbo again. Nobody knows for sure if the state won't turn Allstate off again.

"Allstate must make a decision," Fish added. "Either they stay in Florida and give (regulators) the documents, or they leave."

Insurance Commissioner McCarty said he sympathized with the agents. "But Allstate left us with no other choice," he said. "They were in violation of Florida law, and we could not allow that to continue.''

Oct 16, 2007: Amid accusations of collusion and price fixing, state insurance regulators send subpoenas to Allstate officials to look into relationships with companies that sell backup insurance, design hurricane risk models and rate insurance companies.

Jan. 15: Insurance Commissioner Kevin McCarty, left, abruptly ends a hearing involving Allstate when company officials say they either can't or won't turn over documents subpoenaed by the state.

Jan. 16: McCarty files an order suspending Allstate from writing any new insurance policies until the company complies with the subpoenas. Allstate files an appeal in district court in Tallahassee.

Jan. 18: The 1st District Court of Appeal overturns McCarty's order and puts Allstate back in business.

Jan. 23: State regulators file a brief seeking to reinstate the suspension, arguing that Allstate broke the law.

Jan. 30: The court rules in Allstate's favor.

Feb. 19: McCarty files an administrative complaint against Allstate alleging multiple violations of the Florida Insurance Code.

April 4: In a major victory for the state, the court rules Allstate can be banned from writing any new policies in Florida. Allstate seeks a rehearing.

April 21: Allstate's motion is denied, but withdrawn an hour later after the court realizes it released the ruling too soon.

Wednesday: The court denies Allstate's motion for a rehearing, saying state regulators can suspend Allstate's license for failing to comply with the subpoenas.

Comments on this article

by AJAX	May 16, 2008 10:33 AM
What's the big deal in rate making practices..Allstate rates process..1. Your credit history 2. Your area history 3. Your driving & claim history4. How much can you split out from your pocket. Isn't it a waste of time ... but who cares...

by Terry	May 15, 2008 5:23 PM
The Insurance Commissioner's Office has to be careful and not "go soft" and not GET IT ALL including the computer code for the claim supression program.

by Jimbo	May 15, 2008 5:10 PM
And those who were seen dancing were thought to be insane by those who could not hear the music. -Friedrich Wilhelm Nietzsche, philosopher (1844-1900)

by Jimbo	May 15, 2008 5:10 PM
Isnt it interesting that the same day the OIR gets it's way and shuts down Allstate for daring to ask for an increase in premium (yes, that is what this is about), the Article on the front page is about Citizens needing to raise premiums by $600 mill

by John	May 15, 2008 5:10 PM
I am beginning to think it is a waste of taxpayers money to be going after them, i'll never see a penny of the money. Not to mention Allstate dropped my homeowners (after 27 yrs with them)and I had no choice but to go with Citizens.

by JH Skyscrapercity	May 15, 2008 11:23 AM
Now if we can get our corrupt Legislature to ban the use of shell companies as a way of avoiding disaster payouts by declaring 'bankruptcy' of the shell company, and protecting the parent company and its wealthy owners.

by Deb	May 15, 2008 11:21 AM
What happened with Nationwide? Gouged us on Homeowners for 3 years then dropped us. No claims. I dropped my auto with them. Nationwide should be "on the table" as well. Rebate over-charges. No new auto. Penalties for cherry-picking and gouging.argh!

by PASCO PETE	May 15, 2008 11:21 AM
GREAT JOB NOW GO AFTER THE REST LET CITIZENS GET THE GOOD AND THE BAD THE COST WOULD COME DOWN AND THE STATE COULD BUILD UP A SURPLUS FOR EMERGENCY ONLY THE INS. CO'S SCWEWED US NOW LETS SCREW THEM!!

by Mac	May 15, 2008 11:19 AM
Curious about who pays who and who gets the money and how it will be spent- fl's state government is a farce.will be voting against all.people have not benefited from any of these espensive actions

by Kurt	May 15, 2008 11:16 AM
Next time a hurricane hits, I'm leaving Florida with the tidal surge and my wallet.

by Uncle S	May 15, 2008 9:11 AM
This is sad. The state govt would rather grand stand with window dressing instead of actually help solve the insurance crisis by bringing in more competition. All this will do is keep competition out. 1 Hurricane will = major assessments for all.

by Rye	May 14, 2008 9:00 PM
To all the free enterprise folks, you're missing the point. Allstate was given a gov't order to release documents and it refused to do so. Results are plain and simple. If you and I were to do the same - we'd be held in contempt and sent to jail.

by Sandy	May 14, 2008 9:00 PM
by FedUp "To REALLY get their attention, don't let them write renews!!!!!" And where would that leave the ones who still have policies? Citizens...NO THANK YOU!

by Concerned	May 14, 2008 5:23 PM
Allstate agents are small business owners many have sizeable loans to pay and are in no way responsible for the travesty going on in Tallahassee by the executives and their lawyers. Agents know who is responsible unfortunately there is not much they

by Joe in St Pete	May 14, 2008 4:33 PM
I had Allstate for years and got dropped last year. Funny thing though, they had a company contact me by the name of Royal Palm. Same agent's number. The only thing that changed overnight was an extra $400. What's up with that?!?!?!

by Billy Boy	May 14, 2008 3:49 PM
Who is going to come to Citizen's rescue when we have a hurricane and Crist's baby does not have any money to pay their claims. Opps they will figure out that they did not charge enough for the risk they were taking in the first place>

by Ray	May 14, 2008 2:58 PM
Hey Joe - Citizens is owned by the government and has no need to make a profit or loss, advertise, or pay a CEO nine figures so they can do insurance way cheaper and more efficiently. For Profit Insurance Co's cherry pick and give them the worst.

by Idiots	May 14, 2008 1:43 PM
This is extortion, plain and simple. I would love for the gov. to come and tell you how much money you can make. Tell you how much you can charge for your products. This is what the Gov is doing and he is affecting thousands of peoples lives.

by WJ	May 14, 2008 1:43 PM
Kevin McCarty for President, Gov or anything else he wants to be. Finally a good decision from the corts. Thank you both. We really need someone to keep their word & strighten out these nightmares left by Bush & Crist. Thanks Again we won't forget.

by WHJ	May 14, 2008 1:37 PM
Allstate has always been a crummy insurance company. They use used parts to repair new cars. Both people that hit me years ago had allstate and both had their attorneys asking me to help them to make allstate pay their claims. Good Job Kevin McCarty!

by paolo	May 14, 2008 1:35 PM
Legislators are in the pocket of insurance companies...hence no reform.

by Citzens Joe	May 14, 2008 1:17 PM
Does anyone really think Citizens should write auto insurannce... these companies make a profit because they know what they're doing; Citizens/Govt does not - they'd lose money on auto and we all get taxed just like homeowners insurance! Stupid!

by Sick n' Tired	May 14, 2008 1:17 PM
Horray! McCarty for Gov. What can he do about fuel prices?

by FedUp	May 14, 2008 12:34 PM
To REALLY get their attention, don't let them write renews!!!!!

by Jeff	May 14, 2008 12:21 PM
I was warned years ago by my father that Allstate was no good. Guess this just proves that.

by WS	May 14, 2008 12:16 PM
Question: How does the $4.6 billion profit compare with the profits they were making before all of the rate increases? I got canceled and the same Allstate agent handles the Royal Palm policy. We are being robbed by Allstate!

by Elise	May 14, 2008 12:13 PM
Their "accident forgiveness" slogan is a load of CRAP!!!!!!

by Ray	May 14, 2008 12:09 PM
They should let Citizens Insurance write the "lucrative" Auto Poplicies as well and make it financially stronger.

by Russ	May 14, 2008 12:08 PM
Shouldn't the market dictate prices? I'm confused. Insurance is amazingly easy to switch. It's not like cell phones where you have 2 yr contracts. Even if you've paid for the year, they give you your money back if you cancel and switch.

by Johnny	May 14, 2008 11:59 AM
If this company is such a bad company why are the politicians up in arms about Allstate dropping 500k policies; shouldn't this make the Gov. happy ... As bad as Charlie and his band of fools make Allstate sound, shouldn't they want all biz dropped.

by Jim	May 14, 2008 11:50 AM
It is about time that Allstate takes a financial hit. Allstate has robbed the state of Florida and the public for too many years via their unethical and questionable if not criminal business activity. I know first hand as victim of Allstate!