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Florida court upholds Allstate suspension
By Michael Peltier
TALLAHASSEE, Florida (Reuters) - A Florida appeals court on Friday upheld a state regulator's order suspending Allstate Corp <ALL.N> from writing new insurance policies in Florida.
The state's Office of Insurance Regulation (OIR) suspended Allstate in January, saying it had not fully complied with a subpoena to testify about its property insurance business. Allstate immediately appealed and won a stay allowing it to continue writing policies.
Florida investigators were trying to determine if Allstate and other companies colluded to prevent property insurance rates from dropping despite legislative action last year to reduce premiums.
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In a statement issued immediately after the ruling by the First District Court of Appeal in Tallahassee on Friday, Insurance Commissioner Kevin McCarty said the suspension would be enforced immediately.
But at an afternoon news conference he pulled back, saying Allstate had 15 days to appeal and he was not sure when the suspension would take effect.
Allstate said it was reviewing the ruling but believed it was not yet final and would continue to write new business.
Nonetheless, McCarty said: "This is good news for the people of Florida. This is good news for all those law-abiding companies doing business in our state."
The suspension would mainly affect new auto policies, since Allstate had previously said it planned to reduce its homeowner policy exposure in Florida.
"We are very disappointed in today's ruling and disagree with the court's opinion," Allstate said in a statement.
Florida has been reeling from a deteriorating real estate market and huge insurance premium increases after eight hurricanes in 2004 and 2005, when insurers paid out about $35 billion in claims.
State regulators asked Allstate officials in January to testify at a hearing on a 41 percent rate increase that Allstate wanted to impose on its property insurance business.
But state officials called off the hearing when Allstate refused to answer questions and provide certain documents.
The appeals court said in its ruling: "The question we must answer is whether OIR can take this action in an effort to enforce its subpoenas. They can."
"OIR was not required to pursue enforcement of its subpoenas in circuit court. Suspension of Allstate's Certificate of Authority is one of OIR's available enforcement options."
McCarty said the company continues to thumb its nose at the state's request for information and recently sent a 196-page list of documents it would not release.
"The company's actions have been contrary to the best interests of the consumer and they have acted in a way that jeopardizes the health and welfare of the people of Florida," he said.
Late Friday, Allstate announced the public release on its Web site of about 150,000 pages of documents relating to a review of its claim practices in the 1990s.
The review was assisted by the management consultant McKinsey & Co and the paperwork has long been thought to advocate a tough approach to handling customer claims.
Allstate said it believed the documents should be kept confidential, but it was releasing them to "address misunderstandings" about how it handles claims.
(Additional reporting by Jonathan Stempel and Lilla Zuill in New York, writing by Jim Loney in Miami; Editing by Braden Reddall/Andre Grenon)
