Florida bans new Allstate insurance policies

State puts brakes on Allstate auto, home insurance sales

BY PAUL FLEMMING
FLORIDA TODAY CAPITAL BUREAU

TALLAHASSEE -- Allstate agents in Florida can’t sell new auto insurance policies this morning. Or homeowners coverage. State regulators have put them out of business in an effort to strong-arm information from the company in an ongoing battle over high rates and business practices.

With the muscle of a favorable court ruling behind him, Florida Insurance Commissioner Kevin McCarty expects Allstate Floridian will soon allow his office free access to its records and thus end the shutdown.

With a signed affidavit from company officers promising unconditional compliance, McCarty said Wednesday he’d lift the then hours-old order against Allstate doing any new business in the state.

“The timeline is in their hands,” McCarty said. “Clearly they have indicated a willingness to provide further documents. It’s unfortunate that it takes a succession of court cases . . . to get their attention.”

For now McCarty is enforcing the suspension he first issued in January to wrest documents and testimony from the company in an ongoing investigation of rates, policy cancellations and business practices.
The sanction does not affect Allstate’s existing 2 million customers.
Allstate officials said they’re moving to fix things.

“We are taking steps to comply with the (court’s) order,” a company statement said. “We have supplied a certification to the (Office of Insurance Regulation) for review and are working to resolve any remaining issues.”

The company said its agents have been told to stop selling new policies.
McCarty’s sanction went into force Wednesday morning when an appeals court shot down Allstate Floridian Insurance Company’s request for a rehearing in its lawsuit to head off the discipline. The court earlier said the state was within its power to put Allstate out of business.

“The substance has always been to compel the company to make their books and records completely available,” McCarty said. “We have since received hundreds of thousands of documents. Most of those came after the (court) made its initial ruling” in favor of regulators.

Wednesday’s 1st District Court of Appeal ruling denied Allstate’s request for a rehearing of an earlier decision that sided with the state’s Office of Insurance Regulation, giving it the power to sanction the company for failing to cooperate in the ongoing investigation.

“Allstate’s willful, indeed potentially criminal, failure to comply with its disclosure obligations has prevented OIR from adequately investigating its reasoned belief that Allstate is systematically defrauding its policyholders,” wrote Judge Paul Hawkes for a unanimous three-judge panel.

The state’s order prohibits Allstate Floridian and 10 affiliates and the companies’ 1,100 agents from selling new property, auto and health insurance policies.

“Unfortunately the terrible uncertainty the Allstate agents, their families and their employees face will continue,” said Bob Lotane, a spokesman for the Florida Association of Insurance and Financial Advisors.

Last month, a handful of Allstate agents met with McCarty.
“I am deeply sympathetic with the plight of the agents,” McCarty said Wednesday. “It’s Allstate’s violation of the law that is putting their livelihoods in peril.”

Earlier this year, McCarty abruptly ended a public hearing with Allstate officials who, he angrily said, were not forthcoming. The next day he issued his order to shut the company down. Allstate went to court to block the move and that case is what the company lost Wednesday.