Allstate Yields Documents

Allstate yields documents

By RANDY DIAMOND

Palm Beach Post Staff Writer

Thursday, January 24, 2008

Allstate unexpectedly delivered thousands of contentious and rarely glimpsed documents to state insurance regulators Wednesday evening, a spokesman for the besieged insurer confirmed.

Ed Domansky, a spokesman for Florida’s Office of Insurance Regulation, said, ”It’s a great step, but in the grand scheme of things, all the documents were due on January 15, they were due a week ago.

"We continue to insist that all subpoenaed documents be produced. ”

The paperwork was turned over the same day Insurance Commissioner Kevin McCarty asked an appellate court to reconsider a ruling that temporarily has allowed Allstate to write new policies in Florida.

McCarty’s office lifted Allstate insurance companies’ legal authority to write most new insurance policies last week, punishment for Allstate’s refusal to turn over state-subpoenaed documents.

The ban lasted only one day before the First District Court of Appeal in Tallahassee granted Allstate’s request to lift the state-ordered restriction temporarily.

In its 12-page response filed Wednesday, McCarty’s office argued that Allstate’s failure to provide the documents was ”a crime” and "further evidenced a continuing attempt by (Allstate) to improperly subvert, manipulate and undermine the regulatory process."

The court has not ruled on the state’s motion.

However, Allstate spokesman Adam Shores has said that the insurer is turning over subpoenaed documents "in waves."

Late Wednesday afternoon, the company produced some of the most fiercely guarded of any Allstate documents. The so-called McKinsey documents consist of a 12,500-slide presentation prepared by Allstate consultant McKinsey & Co. Part of an overhaul of the company’s national claim-handling procedures, the material recommends that Allstate take a hard-nosed approach to settling claims.

Two years ago, Allstate went to New Mexico state court to keep a plaintiff’s attorney from publishing a book based on the documents. Allstate previously had defied a judicial order mandating that it turn over the slides.

Allstate has argued repeatedly that the documents consist of trade secrets, and that it would be damaged if competing companies got a glimpse of how it conducted business. Critics say the documents reveal a strategy to boost profits by shortchanging customers.

Shores said he did not know why McCarty’s office wanted to examine the documents, because they are not used to determine claims. They were subpoenaed as part of the state’s inquiry into why Allstate’s Florida subsidiaries have failed to deliver on lower property and casualty rates for about 315,000 customers.

In September, Allstate sought approval for a property insurance rate increase of more than 40 percent, just three months after it agreed to reduce rates by an average 14 percent as part of the governor and legislature’s rate reduction plan.

The state is seeking still more documents, and Shores said the company plans to comply.

Even if the insurer turned over everything tomorrow, though, the legal battle would not end. That’s because Allstate is asking the appellate court to rule that Florida can never suspend its license to do business unless the safety and welfare of the public is at stake.

"There can be no clearer threat to the safety and welfare of the public than a continuing willful violation of the law,” McCarty said.