Florida panel threatens Allstate

Wednesday, January 16, 2008

By Paige St. John
news-press.com Tallahassee bureau
Originally posted on January 16, 2008

Tallahassee - Florida insurance regulators abruptly ended a hearing with Allstate executives Tuesday, angered that the company and its attorneys failed to fully comply with a subpoena demanding information on property coverage rates.

The hearing was scheduled to last two days, but state officials cut it short after two hours during which company officials and lawyers were pressed by regulators about why they hadn’t supplied all the documents the state wants, and whether they are following a new law meant to lower premiums.

Allstate has given Florida more than 30,000 pages of documents, but at the hearing regulators complained the bulk of what they’ve been given, all of it stamped “trade secret,” exists on public Web sites.

Insurance Commissioner Kevin McCarty called the response a “slap in the face,” and announced Allstate’s ability to do business in Florida is at risk.

“We will take whatever steps are necessary to ensure that Allstate Insurance does not continue to thumb their nose at the laws of Florida . ... Their certificates (of operation) are certainly under review,” the commissioner said after pulling the plug on a two-day hearing after just two hours.

McCarty charged that key records are missing, including those that would show whether Allstate conspired with other Florida insurers to “frustrate” rate cuts ordered last spring by the Legislature.

Among documents Allstate has refused since October to hand over, claiming in a 51-page objection letter that such files are “irrelevant,” are all communications with trade groups such as the Florida Insurance Council.

Allstate spokesman Adam Shores on Tuesday said the company simply needed more time.

“We are working as diligently as we can, as fast as we can, to comply with the request,” Shores said.

“We look at this as an opportunity to tell our story ... we are a pillar of this economy and we contribute to Florida’s well-being,” Shores said.

The insurer sent three executives and a lobbyist to the hearing who ultimately could not answer most of McCarty’s questions.

They did reveal Allstate made plans to use a computer model that increased projected hurricane loss estimates by 43 percent when initial calculations showed a rate cut was in order.

They also showed Allstate after the first 2004 hurricanes created a plan - code-named Bermuda High - to cut the home insurance it writes in Florida while pumping up its auto business.

The insurer did exactly that, dropping hundreds of thousands of Floridians while encouraging them to accept home coverage from Allstate-endorsed carriers that kept their car coverage with Allstate.

Gov. Charlie Crist called Allstate’s response “pretty sickening.”

“I am very distressed by Allstate’s reaction to the subpoenas ... lack of reaction, I should say,” the governor said.

At least four other insurers have been served similar Florida subpoenas. Deputy Insurance Commissioner Belinda Miller said those companies, including State Farm, have so far complied.

Tallahassee lawyer Pete Antonnaci, hired to represent Allstate, pledged “redoubled” efforts going forward to answer Florida’s demands. Allstate also used Tuesday’s forum to announce it will drop its appeal of the state’s denial of a 42 percent rate hike.

“The Office of Insurance Regulation has gotten our attention,” Antonnaci said.

That unleashed a firestorm from Senate president-designate Jeff Atwater, who sat in on Tuesday’s hearing and will preside Feb. 4 and 5 over Senate hearings on insurer pricing practices.
Allstate is among those companies required to attend.

“I just wonder what was it about your customer, what was it about the citizen of Florida, what was it about their financial hardship, what was it about their suffering, that was unable to get your attention,” Atwater asked.

“I will tell you, this dance is over,” Atwater declared.

“The people of Florida needed relief, the Legislature offered them relief, and they are going to get relief, and I will tell you, in the end, they are also going to get justice.”

— The Associated Press contributed to this report.