Commissioner McCarty Holds Press Conference Regarding OIR Immediate Final Order Against Allstate

Florida Insurance Commissioner Kevin McCarty held a press conference today, April 4, 2008, to discuss the First District Court of Appeal’s Order upholding the Florida Office of Insurance Regulation’s (“OIR”) Immediate Final Order (“Order”) of January 17, 2008. The January 17 Order suspended the licenses of the Allstate Companies from writing any new business in Florida.

It was clarified during the press conference that today’s (April 4) Order, like the January 17 Order, affects all Allstate Companies and all Allstate lines. Commissioner McCarty said that this suspension will not affect existing Allstate policyholders.

According to Commissioner McCarty, Allstate is withholding a substantial amount of documents from the OIR regarding Allstate’s dealings with rating companies, modeling companies and trade groups. These documents are being sought by the State of Florida in relation to Allstate’s requested rate increase in September, 2007, and were a part of the OIR’s October 16, 2007 subpoena.

In addition, the OIR also has not received a number of claims handling documents regarding Allstate homeowners’ policies.

Following the April 4 Order upholding the January 17 Order, Allstate has 15 days to request a re-hearing.

The OIR has filed a Motion of Clarification with the First District Court of Appeals seeking clarification on the date of the suspension. Commissioner McCarty stated that the suspension will not be lifted until Allstate complies with the OIR’s subpoena request for documents.

Commissioner McCarty also lauded SB 2860 (sponsored by Senator Jeff Atwater) as a result of the Senate Select Committee on Property Insurance Accountability’s findings, which would increase fines and penalties for companies that do not comply with orders from the OIR. Penalties in the bill are currently set at $25,000 per day for non-willful non-compliance and $100,000 for willful non-compliance.

A copy of the Court’s order is attached for your review.

Governor Crist issued the following statement regarding today’s decision by the First District Court of Appeals:

“The Court today ruled in the people’s favor. I applaud Commissioner McCarty for his leadership and for standing strong in the fight for the people of Florida. My administration will continue to push to lower property insurance that has made homeownership unaffordable.”

Senator Jeff Atwater also issued a statement regarding today’s decision, the text of which is reprinted below.

Information regarding the press conference from the OIR is also reprinted below.

Should you have any questions or comments, please do not hesitate to contact this office.

 

Senator Atwater Praises Court Decision on Allstate

Senator Jeff Atwater (R-North Palm Beach) today praised a decision by the First Circuit Court of Appeals to overturn a stay requested by Allstate in a case where the insurance giant refused to comply with subpoenas and provide documents to state investigators.

“This is a clear message to big insurance,” said Senator Atwater. “You’re not above the law and you’re not going to get away with abusing Florida consumers behind the cover of trade secrets and legal maneuvers. This case reveals the lengths some companies will go to conceal how their business practices are deliberately structured to never give their customers a fair shake.”

The Court’s order stated the Office of Insurance Regulation had the right to suspend Allstate from conducting new business in Florida and illustrated the extensive legal evasions Allstate had engaged in during investigations by the OIR and the Florida Senate.

Senator Atwater is the sponsor of the Homeowners’ Bill of Rights, a package of insurance reforms that will fundamentally alter the way insurance companies do business in the state of Florida.

“This decision shows once again why the fundamental insurance reforms in the Homeowners Bill of Rights are so urgently needed,” concluded Atwater.

The full text of the decision can be found at: http://opinions.1dca.org/written/opinions2008/04-04-08/08-0275.pdf

Florida Insurance Commissioner Announces Resumption of Allstate Insurance Companies’ Suspension

 TALLAHASSEE, Fla. – Florida Insurance Commissioner Kevin McCarty today announced that he will resume the suspension of the certificates of authority of the Allstate Companies to write new insurance in Florida until they fully comply with the subpoenas served Oct. 16 by the Office of Insurance Regulation (Office).

Today’s announcement by the commissioner follows today’s First District Court of Appeal’s ruling to allowing the suspension of Allstates’ certificates of authority Jan. 16. to resume. The Office is seeking clarification from the court on exactly when the suspension resumes.

The suspension came after the commissioner abruptly halted a hearing into the Allstate Companies’ reinsurance program, their relationships with risk modeling companies, insurance rating organizations and insurance trade associations. Allstate appealed the suspension to the DCA, asserting the commissioner exceeded his authority; the court stayed the suspension until it could consider the issue, and today lifted the stay, ruling that the commissioner did not exceed his authority to suspend Allstate Companies’ licenses.

“I remain seriously concerned with Allstate’s continued failure to comply with our subpoenas; as evidenced by its 196-page privilege log of documents that they have failed to provide us,” said Commissioner McCarty. “They have not been willing to explain to us their relationships with rating agencies, modeling companies and trade groups and how these relationships might have influenced the huge rate increases they requested in September.

“If Allstate is willing to accrue $25,000 per day in fines to a Missouri court for its ongoing failure to provide similar documents, it’s obvious to me that it will take more than a monetary sanction to get them to comply with our subpoenas.”

Allstate was to have provided all appropriate company documents related to the above topics by Jan. 16, but failed to do so. Instead, the Office received 51 pages of objections to the subpoenas.

The suspension applies to Allstate Floridian Insurance Co., Allstate Indemnity Co., Allstate Property & Casualty Insurance Co., Allstate Insurance Co., Allstate Floridian Indemnity Co., Allstate Fire and Casualty Insurance Co., Encompass Insurance Co. of America Encompass Indemnity Co., Encompass Floridian Insurance Co., and Encompass Floridian Indemnity Co., and it only suspends the companies from writing new business in Florida.

Existing policyholders will not be affected. Allstate must continue to service them and the companies must make all required statutory filings including, but not limited to, audited annual financial statements, quarterly financial statements and rate filings.

“The duration of the suspension is up to them,” added McCarty. “It will be lifted when I am satisfied that we have received each and every document we need to properly investigate the important issues before us.

“The companies’ actions have been contrary to the best interests of Florida consumers.”

A copy of the subpoena is available to review.