Fla. Commissioner Lifts Allstate Suspension

Florida's top insurance regulator said today he will not implement his order suspending Allstate's ability to write new business, which an appeals court ruled Wednesday was his right.

Insurance Commissioner Kevin McCarty announced that he had ordered a stay of the suspension because the Northbrook, Ill.-based insurance giant had finally complied with a subpoena issued by his Office of Insurance Regulation last October seeking thousands of documents from the insurer.

He warned that the suspension could go back into effect if he seeks more material and the insurer does not comply.

Mr. McCarty said Allstate had submitted an affidavit certifying that it has provided all the material that was demanded as part of an investigation of Allstate's rate-setting and business practices in Florida.

Allstate spokesman Adam Shores said the company welcomed the announcement and has said it will work with and cooperate with Mr. McCarty's office. "If there's more information they are looking for we will be glad to provide that to them."

The commissioner's announcement follows First District Court of Appeal's opinion denying Allstate's motion for a rehearing on the issue of the commissioner's right to issue the subpoena.

"I have stayed the suspension of Allstate, and I have accepted its affidavit as evidence that they have completely and unconditionally complied with Florida law and with our requests for documents," said Commissioner McCarty in a statement.

He added, "I also, though, have made it perfectly clear that failure to cooperate with necessary, ongoing requests from the office will result in an immediate resumption of the suspension.

"As I said yesterday, it is unfortunate for Allstate's agents, their staff members and their policyholders that it has taken court action to compel the company to comply with Florida law. The district court's order enables the office to investigate whether Allstate has engaged in claims practices that have been harmful to its policyholders."

The OIR and Allstate have been battling in the courts over whether the suspension order could be enforced since Jan. 17, when he issued it.

Mr. McCarty issued the order after he abruptly halted a Jan. 15 hearing that was to look into the Allstate Companies' reinsurance program and possible collusion in their relationships with risk modeling companies, insurance rating organizations and insurance trade associations.

In addition to pursuing his investigation into business practices, Mr. McCarty denied an Allstate request for a 42 percent rate increase.

The number of documents asked for from the company was said to involve 825,000 pages. According to Mr. McCarty's office, nearly four months after the subpoena was issued last year only 36,000 pages had been produced.

In litigating the matter the company had argued in part that trade secrets were involved. Among the documents was a consultant's study that reportedly advised the company that it could save money by denying, delaying and defending in court against payment of claims.

A spokesman for Mr. McCarty, Ed Domansky, said the commissioner and his attorneys will now review all the Allstate material "and see where that takes us."

When the hearing for the insurer was called off in January, Mr. Domansky said the insurer in addition to failing to provide requested documents had also not brought certain company executives who were called as witnesses. The company gave the OIR 51 pages of objections to the subpoenas.

OIR said on June 16 there will be a hearing on a collateral legal matter before the Division of Administrative Hearings concerning Allstate's alleged failure to comply with the document request; there also are two other counts--falsely asserting trade secrets and false certification of its rate filing last September.

Mr. McCarty met recently with Allstate agents and told them he understood their concerns, but they should tell their company to comply.

In reaction to his action today the Florida Association of Insurance and Financial Advisors released a statement saying, "We cannot express enough our gratitude to the commissioner, not only for acting in such an expeditious manner but also for taking time recently to meet with a group of Allstate agents, to hear the concerns they had about their businesses, their families and their employees.

"Despite his deep convictions regarding this dispute, Commissioner McCarty genuinely showed profound concern for these small-business men and women who work on the main streets of towns and cities all over our state.

"While we understand there are still issues that are pending in this matter, TGIF has never meant quite so much to the Allstate agents in Florida."