Allstate’s Appeal Buys It Some More Time to Write Florida Policies

Apr 16, 2008

The Ledger--April 16, 2008
BY TOM ZUCCO
ST. PETERSBURG TIMES

Allstate Insurance Corp. bought itself at least two more days to keep peddling new policies in Florida.

The state’s fourth-largest property and second-largest auto insurer late Monday filed a 47-page motion asking the 1st District Court of Appeal to rehear its suspension by state insurance regulators. Allstate would have had to stop writing all types of new insurance policies in Florida immediately had it failed to meet Monday’s court deadline to review the case.

“We are still open for business until the court makes a ruling,” Allstate spokeswoman Amy Moore said. “We filed by the deadline to preserve our legal rights and to give us time to have our position heard.

Insurance Commissioner Kevin McCarty in January ordered Allstate to stop writing new business, contending the company did not comply with state-issued subpoenas. Allstate won a stay of the order, and although the appeals court recently sided with regulators and reinstated the order, the court allowed Allstate to file for a rehearing.

In seeking another hearing, Allstate cited the issue of attorney-client privilege and whether regulators had the authority to suspend its license.

The Florida Office of Insurance Regulation has until 5 p.m. today to respond to Allstate’s motion.

Moore said Allstate has already produced more than 400,000 documents, “and we’re still working diligently to get OIR everything they need.”

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, the largest increase of any major insurer. That request was denied in November, and the company has since voluntarily withdrawn it.

Because Allstate has dropped more than 400,000 policies over the past four years, McCarty said stopping the Northbrook, Ill., insurer from writing new homeowner business would have had little financial impact.

But add the company’s lucrative auto line and the stakes change. Although existing policies would not be affected and the company could continue to renew policies, regulators say a suspension of auto business could eventually loom large. 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.

Allstate has about 4,000 active homeowners policies in Polk County, making it the county’s fifth-largest insurer, according to the most recent available data from the OIR.

Allstate sells about 3,500 new auto policies per week statewide. The company wrote nearly $2 billion worth of auto insurance in Florida in 2006, the last year for which statistics are available.