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In Florida: No Auto for Allstate

By TOM ZUCCO and KRIS HUNDLEY, St. Petersburg Times  Posted by Donn Marten (about the submitter)       (Page 1 of 3 pages)   No comments

TALLAHASSEE - Florida Insurance Commissioner Kevin McCarty gripped the lectern and leaned into the bank of microphones.

"We're going to hit them where it hurts," he said.

In a move unprecedented in Florida regulatory history, McCarty on Wednesday issued an order banning Allstate Insurance Corp. from writing new auto insurance policies in the state until the company complies with subpoenas sent by state regulators in October.

Allstate wrote nearly $2-billion worth of auto insurance in Florida in 2006, the last year for which statistics are available.

The suspension comes a day after McCarty abruptly halted a public hearing looking into Allstate's underwriting and claims-paying practices in its homeowners insurance business, saying the company had deliberately failed to turn over documents key to the investigation.

Regulators want to know why Allstate, the largest publicly traded U.S. home and auto insurer, has not complied with legislation passed last year that directs insurance companies to lower their homeowner rates. Allstate had asked to raise its homeowner rates an average of 42 percent statewide, a request that was denied in November.

"Who are they to tell us what's relevant?" McCarty said. "I have little choice but to take an action that will send a clear message about how seriously I am taking this issue."

The suspension applies to Allstate Insurance Co., Allstate Indemnity Co. and Allstate Property and Casualty Co., all of which are the company's primary sellers of auto insurance. Two of Allstate's smaller subsidiaries, Encompass Floridian Indemnity and Encompass Floridian Insurance, are not affected by the order.

"They've been horrific in their corporate ethic in terms of not responding to the great reform the Legislature passed last year," said Gov. Charlie Crist, a frequent critic of the property insurers in the state. "I'm of the belief that they are probably violating the law.

"It's greedy and it's wrong."

Allstate is surprised

The financial impact of the suspension eventually could be immense, regulators say, because auto insurance is generally regarded as one of the most lucrative lines of insurance. The second-largest auto insurer in Florida, behind State Farm, Allstate's 1.7-million auto policies represent more than three-quarters of the company's business in Florida.

The company sells about 3,500 new auto policies a week statewide.

"They're going to be losing a lot of money," said Steve Parton, the Office of Insurance Regulation's general counsel, adding that Allstate can appeal to district court to seek an injunction to stop the order.

In a statement Wednesday, Allstate said it was surprised at the actions "based on our dealings with regulators over the course of several months and dozens of phone conversations."

The company said it has already turned over nearly 40,000 documents to regulators and will continue to send more.

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Donn Marten is a free lance writer and consultant who resides in West Central Florida.

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