BY DANIEL HAYS
NU Online News Service, Jan. 16, 9:45 a.m. EST
A hearing probing the background of Allstate’s Florida property insurance rate hike requests was abruptly halted yesterday by the state insurance commissioner, who said the company failed to provide the information he wanted.
Today Commissioner Kevin McCarty said he was suspending Allstate’s license until they complied with the Office of Insurance Regulation’s subpoena demanding a variety of information. He said the move would not affect the company’s ability to provide coverage to current policyholders or those seeking renewals.
In breaking off the hearing yesterday Mr. McCarty cancelled what was to be a two-day session with Allstate executives called to the capital in Tallahassee to respond to the subpoena. An Allstate spokesman denied Mr. McCarty’s description of the insurer as uncooperative, and said the carrier had provided thousands of documents and continued to produce them.
Mr. McCarty’s move, which he had hinted at last week in an interview with National Underwriter, interrupted a session that OIR said was to examine Allstate’s reinsurance program as well as its relationships to risk-modeling companies, insurance rating organizations and insurance trade associations.
“Allstate was to have provided all appropriate company documents related to the above topics, but failed to do so,” OIR said. Mr. McCarty said in a statement that “Allstate’s total lack of cooperation and responsiveness made it unproductive to continue the hearing.”
“The bottom line is that it is not fair to Florida consumers that this company has not complied with our subpoenas and is not 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 have requested,” he added. “I am as deeply concerned as any consumer at the lack of respect that Allstate has shown toward their statutory responsibilities,” he said.
Commissioner McCarty advised those in the hearing that he was adjourning to consider options that could include a fine, suspension or even revocation of Allstate’s certificate of authority--essentially taking away its right to do business in Florida. The commissioner said he expects to make his decision very soon.
Allstate is the latest company with which the OIR has clashed over rates, which state officials expected would be lowered after the legislature passed a measure allowing the Florida Hurricane Catastrophe Fund to provide insurers with discount reinsurance. OIR’s general counsel, Steve Parton, said while Allstate did provide some documents, the company “refused to provide documents specifically related to their communications with catastrophe modeling companies, insurance rating organizations and insurance trade associations.”
Allstate Floridian Indemnity and Allstate Florida Insurance Company have requested rate increases of 28.3 percent and 41.9 percent, respectively. Encompass Floridian Indemnity requested a 38.4 percent increase, while Encompass Floridian Insurance Company requested a 39.7 percent increase.
An Allstate spokesman, Adam Shores, said since OIR denied those requests, the company had withdrawn a petition to go to an administrative hearing so it could discuss a rate that would be adequate for the company and affordable for customers. Regarding compliance with the subpoena, he said Allstate has “produced since mid-October over 40,000 pages of documents.” He said there have been 60 business days available to get the material together, amounting to 700 pages a day. He said the company outlined in writing a plan to provide material in a series of waves that OIR could review as they were produced, and had verbal conversations about postponing the hearing. “We have complied to the best of our ability,” said Mr. Shore. “We’re with them. They want affordability, and that’s what we want, too. We are players in this game, just like they are.”
Mr. McCarty said last week in an interview that Allstate had objected to areas of interest in the subpoena, including their communications and dealings with rating organizations, risk modelers and trade associations. He said then that, if necessary, “we will go to court to enforce the subpoena.”