Fla. Halts Allstate from Writing New Business in All Lines; Insurer Appeals

The Florida Office of Insurance Regulation issued a final order immediately suspending Allstate Insurance Co. and its subsidiaries from writing any new business in all lines of insurance in Florida – including auto and commercial – until the company fully complies with the subpoenas served Oct. 16 by the OIR. Current policyholders will not be affected.

The suspension does not affect policy renewals.

The latest OIR order comes on the heels of a news conference held Wednesday announcing the suspension of Allstate’s certificate of authority. The Wednesday news conference was prompted by a Tuesday meeting between OIR and Allstate in which Insurance Commissioner Kevin McCarty abruptly halted the scheduled two-day hearing into the Allstate Companies’ reinsurance program, 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 Tuesday as he cut the hearing short.

OIR spokesman Tom Zutell said the final order became effective at 1 p.m. Thursday (Jan. 17) and disallows Allstate from writing new policies in Florida after that minute.

Upon receipt of the order, OIR required Allstate to inform its entire agent force of the regulatory action. Further, Allstate was told it must provide proof of all such communication to the OIR by close of business on Jan. 22, taking into consideration that Jan. 21 is a federal holiday.

Zutell said McCarty is exercising the only available remaining option under Florida law to squeeze Allstate into compliance.

Allstate officials, however, believe they are taking the required steps and complying as effectively as possible.

Allstate spokesman Adam Shore said the company appealed the OIR order to the 1st District Court of Appeal Thursday for an immediate stay of the order. He said in the meantime Allstate continues to provide thousands of pages of documents to the state of Florida and he stressed that the company and its subsidiaries continue to service their customers including paying claims.

Shore said Allstate has been in constant communication with its agent force and will continue to do so throughout the ordeal.

The order applies to all Allstate companies on which the subpoenas were served:
• Allstate Floridian Insurance Co.
• Allstate Indemnity Co.
• Allstate Property & Casualty Insurance Co.
• Allstate Insurance Co.
• Allstate Floridian Indemnity Co.
• Allstate Fire and Casualty Insurance Co.
• Encompass Insurance Co. of America
• Encompass Indemnity Co.
• Encompass Floridian Insurance Co.
• Encompass Floridian Indemnity Co.

For Allstate’s 10 companies operating in Florida, only new business is affected by the order. Existing Allstate policyholders are not affected. In addition, policy renewals will not be affected, according to the OIR.

OIR said the key documents requested in the subpoenas go to the heart of the regulator’s investigation into possible inappropriate behavior by Allstate and ask for an explanation of the companies’ relationships with rating agencies, modeling companies and trade groups and how these relationships might have influenced the huge rate increases they requested in September 2007.

Source: Florida Office of Insurance Regulation

Topics Florida Carriers Legislation