Allstate was suspended from writing new property-casualty business in Florida last week after a Florida appellate court upheld the state’s right to do so.

The suspension was sought in January by Florida Insurance Commissioner Kevin McCarty after the insurer balked at a subpoena seeking massive amounts of material concerning ratemaking and claims-handling processes.

Last Wednesday’s decision by a panel of the First District Court of Appeals in Tallahassee upheld an earlier opinion which said the Office of Insurance Regulation had the right to suspend Allstate’s authority to write new business for noncompliance with the January subpoena.

After the ruling there were indications from the insurer and the Office of Insurance Regulation late last week that Allstate has since stepped up compliance, suggesting the suspension could soon be lifted.

OIR General Counsel Steve Parton said Allstate has already supplied more than 100,000 pages of documents. Still, Allstate is subject to parallel proceedings that could result in heavy fines related to its past recalcitrance, he said, noting that an administrative law judge is hearing the parallel case.

Tom Zutell, OIR deputy communications director, said recently passed legislation allows the state to triple the former level of fines, although he added that he did not know those levels.

Besides supplying a certification of compliance necessary to lift the suspension–which Allstate confirmed it did last week–the insurer must also agree to turn over additional documents if regulators request them, Mr. Parton said, noting that failure to do so could mean another license suspension.

In the interim, Allstate took steps to comply with the order to stop writing new policies. “Systems capabilities will be shut down shortly,” the insurer said in a statement.

The suspension affects more than 1,100 captive agencies that write Allstate homeowners’ and auto insurance in the state, according to Jim Fish, executive director of the National Association of Professional Allstate Agents Inc. in Gulfport, Miss.

According to OIR, Allstate was Florida’s third-largest auto insurer in 2007 with 14.8 percent of the Florida auto market, and as of March 31, it also held 9.2 percent of the state’s homeowners market.

During a conference call, Mr. McCarty said he was aware of the problems being faced by Allstate’s agents. “I am deeply concerned about this, and met with them a month ago.”

Mr. McCarty said he told them, “You should talk to Northbrook and tell them,” referring to Allstate’s Illinois headquarters. “They should comply with the law. Violation of the law is putting [agents'] livelihood in peril.”

In the appellate court’s Wednesday ruling on a motion for rehearing filed by Allstate, the panel said that “on the merits, our opinion remains unchanged.”

“In attempting to conduct its investigation, OIR was faced with Allstate’s representations that it would decide which documents it would produce and Allstate’s history of incurring millions of dollars in court-ordered fines rather than comply with court-ordered production,” the court said in its opinion, written by Judge Paul Hawkes.

“The scope of OIR’s investigation cannot be limited by Allstate’s unilateral actions. Suspension of Allstate’s Certificates of Authority was one of OIR’s statutorily available options when Allstate refused to cooperate in the investigation,” according to the opinion.

The court had issued a similar ruling on the case April 22, but swiftly withdrew the ruling, citing procedural rules that an opinion required more time than had passed since Allstate filed its motion.