[StBernard] Florida hits Allstate in the moneymaker: Auto policies

[Westley Annis]

Florida hits Allstate in the moneymaker: Auto policies
By BY RANDY DIAMOND and DARA KAM

Palm Beach Post Staff Writers

Thursday, January 17, 2008

TALLAHASSEE - Charlie Crist took the battle between insurance regulators and
Allstate Insurance companies and kicked it up a notch Wednesday: The
governor suggested Allstate customers rethink their policies.

"I'd go to another company," Crist said.

The governor made his comments just hours after Office of Insurance
Regulation Commissioner Kevin McCarty announced the state is barring
Allstate from writing new policies of any kind in Florida, retaliation for
the insurer's refusal to produce subpoenaed information about how it sets
property insurance rates.

The penalty turns the tables on Allstate, which has engaged in an aggressive
plan to shed most of its Florida homeowner insurance business while at the
same time growing its lucrative auto insurance lines. It's been adding an
estimated 3,000 new auto insurance policies a week - and that's where
McCarty's suspension is aimed. "We're going to hit them where it hurts," he
said. "We're going to get their attention."

The decision does not affect renewals of existing auto policies, and
policies are not being canceled.

Still, the suspension will cost. By one Wall Street analyst's estimate, the
suspension could cost the insurer $10 million a year in lost business.

Allstate spokesman Adam Shores expressed surprise at the harshness of
McCarty's action and said that company officials "are evaluating our
options." Those options include filing a district court appeal.

Waiting on the sidelines are an estimated 1,200 Allstate agents and
employees in Florida who can't write new policies.

"We're innocent bystanders,'' said Keri Rayborn, the Florida lobbyist for
the National Association of Professional Allstate Agents. "We can't make the
company provide the documents."

Those documents were expected to shed light on why the insurer's Florida
subsidiaries have failed to deliver on lower rates for about 315,000
customers. In September, Allstate sought state 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 documents were also expected to provide a rare glimpse into how insurers
work with ratings agencies, reinsurance companies and firms that predict
hurricanes - and whether those groups work to keep rates unnecessarily high.

Allstate's Shores said the company has turned over 40,000 documents and
plans to produce more. However, Allstate balked at turning over paperwork it
said would reveal trade secrets - although trade secrets must be kept secret
under Florida law - and some material the company described as "irrelevant."

So, while Allstate executives had shown up Tuesday for planned hearings,
prepared to testify under oath about how the insurer calculates rates, they
still hadn't produced the state-subpoened documents. "A slap in the face,"
fumed McCarty, who cut the sessions short.

"What do they have to hide?" Crist said. "Why are they stonewalling? Is
there something so violative in their records that they're not willing to
give them to us?"

How long the company, the second-largest automobile insurance carrier in
Florida, will be barred from issuing new policies "is totally up to
Allstate," McCarty said. He plans to lift the suspension when the documents
he sought through the subpoena are provided.

Until then, insurance regulators are considering other penalties against the
company, McCarty said. "The no-kidding rule is in effect," he said.
 
  
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