Today’s Court Order Against Allstate Withdrawn Due To Clerical Error

On Monday, April 21, 2007, Florida Insurance Commissioner Kevin McCarty held a press conference to announce that the Allstate Companies’ motions to supplement the record, rehearing and leave to appear as Amici Curiae have been denied by the First District Court of Appeals. 

However, in a sudden turn of events, halfway through the press conference, Florida Office of Insurance Regulation (“OIR”) General Counsel Steve Parton and Commissioner McCarty left the room and, upon their return, announced that the Court order against Allstate had been withdrawn due to clerical error.  Therefore, the Court actually has not ruled at this time regarding the Allstate’s request for a rehearing.

The OIR quickly issued the following correction:

The District Court of Appeal has withdrawn the Order it issued earlier today.

The Court stated that it was “issued due to clerical error.”

Below are links to both Orders:

1. http://www.1dca.org/allstate/order2.pdf            

2. http://www.1dca.org/allstate/order3.pdf

A copy of the Orders also is attached for your review.

Prior to the stunning news, the OIR asserted its authority to suspend Allstate from writing new policies in Florida. 

To view a copy of the now-withdrawn First District Court of Appeal’s Order, click here. 

Prior to the reversal, Florida Insurance Commissioner Kevin McCarty had remarked, “This is an important victory for our state . . . let this be a warning to other companies who choose to violate the law in Florida.”

With the assurance that “As soon as Allstate is in compliance with the law, we will lift the suspension,” Commissioner McCarty said that existing Allstate policyholders would not be impacted by the Order.

If the Order had been maintained, Allstate would not have been authorized to write any new policies, effective tomorrow April 22, 2008.

In regard to new policies that may have been purchased today, Commissioner McCarty explained that the OIR’s intent is not to disrupt “anything that is in the pipeline.” 

Having met with a group of Allstate agents recently regarding the issue, Commissioner McCarty told the agents “It is unfortunate that Allstate put you in this position.”

In answering another question regarding purview and state jurisdiction, it was revealed that there exists an appeal by Allstate to the Florida Supreme Court.

“The resolution,” Commissioner McCarty said,”is for Allstate to comply with the laws of the State of Florida.”

The OIR press release is reprinted below.

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

 

Florida Appeals Court Denies Allstate Motion for Rehearing, Suspension will Resume

TALLAHASSEE, Fla. – Florida Insurance Commissioner Kevin McCarty today announced the immediate resumption of the suspension of the certificates of authority of the Allstate Companies to write new insurance policies in Florida. The suspension applies to all lines of business and will remain in effect until the companies fully comply with the subpoenas served Oct. 16 by the Office of Insurance Regulation (Office).

The commissioner’s announcement follows today’s First District Court of Appeal’s Order denying Allstate’s motion for a rehearing. 

“This is a very meaningful ruling for the state of Florida,” said Commissioner McCarty. “Our office will not tolerate companies that don’t follow the law, and this should serve as a warning to all of them that I am serious about my commitment to protect Florida consumers from unfair rates and unfair business practices.”

The suspension was put in place Jan. 17 after the commissioner abruptly halted a Jan. 15 hearing that was to look 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 that the commissioner had exceeded his authority by issuing the Immediate Final Order to suspend its certificates of authority; the court stayed the suspension until it could consider the issue.

In its April 4 ruling, the three DCA judges unanimously agreed that the commissioner had not exceeded his authority when he issued the January Order to suspend the Allstate Companies’ licenses.

“Although the company has been producing documents more consistently since I initially imposed the suspension, I remain seriously concerned with Allstate’s continued reluctance to comply with our subpoenas and their attempts to dictate which documents they believe are relevant to our investigation – as evidenced by the 196-page list of documents, which they have indicated they are withholding from our investigation,” added McCarty. “Florida law is very clear that companies must ‘freely’ make available all documents requested by my office.

“Allstate continues to be unwilling 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.”

Allstate was to have provided all appropriate company documents related to the above topics by Jan. 15 and was to have brought appropriate witnesses to testify about the documents and issues at the Jan. 15 hearing, but failed to do so. Instead, the Office received 51 pages of objections to the subpoenas. The Court’s April 4 ruling outlines explicitly Allstate’s failure to adequately comply at the Jan. 15 hearing. 

Existing policyholders will not be affected by the suspension. 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 length of the suspension is up to them,” McCarty continued. “I will immediately lift it when I am satisfied that they have provided all of the documents required by our subpoenas.

“Florida consumers deserve better, and I will see to it that companies do not act contrary to consumers’ best interests. This situation is not the norm. Most companies cooperate fully with the Office.”

Commissioner McCarty met April 9 with a group of Allstate agents and assured them that the suspension would be lifted as soon as Allstate complied with the law.

A copy of the subpoena is available to review.

The suspension applies to the following Allstate companies, and it only suspends the companies from writing new business in Florida.

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.
Encompass Floridian Indemnity Co.

 

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