Florida Regulator Lifts Allstate Suspension; Continuing Compliance Required

May 16, 2008

Florida Insurance Commissioner Kevin McCarty ordered a stay of the suspension of the Allstate Companies’ licenses to sell new business in the state.

McCarty’s decision comes as the result of Allstate’s submission of an affidavit certifying that it has complied with Florida law by freely providing all documents requested by the Office of Insurance Regulation as part of its investigation of Allstate’s business practices in Florida.

The commissioner’s announcement follows the May 15 First District Court of Appeal’s opinion denying Allstate’s motion for a rehearing and affirming the OIR’s action in issuing the January immediate final order.

“I have stayed the suspension of Allstate, and I have accepted its affidavit as evidence that they have completely and unconditionally complied with Florida law and with our requests for documents,” McCarty said. “I also, though, have made it perfectly clear that failure to cooperate with necessary, ongoing requests from the Office (OIR) will result in an immediate resumption of the suspension.”

Allstate produced hundreds of thousands of pages of documents that OIR staff members have been thoroughly reviewing. Of the more than 825,000 pages mentioned in its affidavit, Allstate produced only 36,000 pages between the Oct. 16 issuance of the subpoenas and the Jan. 17 issuance of the IFO.

Pleased with the OIR announcement, Allstate spokesperson Amy Moore said, “We also look forward to continuing the dialogue with the OIR on building solutions to Florida’s troubled property market.”

Moore said Allstate and Allstate Floridian have engaged in a months-long rolling production of documents surrounding the companies’ relationships with reinsurance companies, catastrophe modeling firms, trade associations and rating agencies. Allstate and Allstate Floridian will continue to work with the Office of Insurance Regulation’s regarding its investigation into industry business practices, she added.

The suspension was initially 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 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 OIR received 51 pages of objections to the subpoenas.

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, replaced by the May 14 opinion, 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. The Court’s April 4 opinion, as well as the May 14 opinion, outlines explicitly Allstate’s failure to adequately comply at the Jan. 15 hearing.

The collateral legal matter with the Division of Administrative Hearings is set for a June 16 hearing. This proceeding involves Allstate’s alleged failure to comply with the document request; there also are two other counts — falsely asserting trade secrets and false certification of its September rate filing.

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