Allstate says it is “back in business” after a Florida judge granted the insurer an emergency motion for immediate relief of a recent order suspending the company’s license to write new business in the state.

Florida Insurance Commissioner Kevin McCarty had suspended Allstate’s license to write new business in the state because the insurer failed to come to a hearing he had called with all the information that his Office of Insurance Regulation [OIR] had demanded in a subpoena. After issuing an order on January 16 suspending Allstate’s right to do business conducted by three of its units that provide auto insurance, the next day McCarty expanded the order to include all 10 of Allstate’s Florida companies. The OIR had emphasized that the suspension was for new business only.

Under the emergency stay granted late Friday afternoon January 18 by the judge, the state OIR now has 10 days from January 18 to show why the stay should not remain. The First District Court of Appeal in Tallahassee issued the temporary injunction after the Northbrook, Illinois -based insurer filed a motion accusing Mr. McCarty of acting unconstitutionally, abusing his powers and “taking punitive vindictive measures under the guise of a so-called emergency.”

McCarty released a statement to confirm he will stand behind his order. “This is just another step in the process that enables Allstate to further delay production of the documents we requested,” said McCarty, who added the OIR is considering its legal options. “Allstate’s motion was not unexpected and it will not stymie my commitment to Florida’s consumers to get to the bottom of this issue.”

At the time McCarty took the initial action, Florida Governor Charlie Crist (R) said the suspension would continue until Allstate turns over the materials the state demanded concerning some of the company’s business practices and relationships. Crist released a statement that he felt Allstate “must have something to hide,” and told a group gathered in Tampa that existing policyholders -- who are not affected by the suspension -- should “fire” Allstate as their insurance provider. “What they have done is unconscionable by ignoring the subpoenas,” Crist said. “They have really done, I think, a tremendous disservice to not only the people in Florida, but their customers by charging them too much, being greedy and doing the wrong thing.”

A key piece of evidence being sought by the Florida regulators is a report by McKinsey and Company, a New York consulting firm that, according to a report by J. Robert Hunter, insurance director of the Consumer Federation of America, led the company to adopt the Colossus computer program that results in reductions of bodily injury claims payments. According to a report in the National Underwriter, the consultant also reportedly advised the insurer that costs could be cut with a policy of aggressively denying them, delaying them and defending against them in court. Separately, a judge in Independence, Missouri has found Allstate in contempt for failing to provide the McKinsey report in an auto injury case, and has said they are liable for $25,000 a day in fines.

Florida regulators are also seeking documents related to non-renewals, underwriting practices and claim-settlement practices, as well as Allstate’s relationships with risk-modeling companies, insurance rating organizations, trade associations and reinsurance companies.

Allstate spokesman Adam Shores told the Associated Press “We’re in the business of protecting homes, protecting automobiles and that’s what we want to do because that’s the role we play in this economy, in this marketplace, and we want to continue to do that.” 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.

McCarty’s order said the pages supplied were not what the subpoena had instructed, noting that the company sent 51 pages of “frivolous objections.” Allstate countered that the subpoena was a “fishing expedition” not related to a hearing on rates and the pass-along of reinsurance savings. In a statement, McCarty said, “If Allstate is willing to pay $25,000 per day in fines to a Missouri court for its ongoing failure to provide similar documents, it’s obvious to me that it will take more than a monetary sanction to get them to comply with our subpoenas.”

Florida Court Lifts Order Against Allstate (Reuters 1/21/07)

Florida Regulator Cuts Off All Allstate Lines (National Underwriter 1/17/08)

Allstate Responds to Florida Suspension (South Florida Business Journal 1/18/08)

Fla. Office of Insurance Regulation Final Order (OIR)

January 22, 2008