The Wall Street Journal-20080116-Florida- Allstate Battle Over Rate Request
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Florida, Allstate Battle Over Rate Request
A WSJ News Roundup
A clash between Florida insurance regulators and Allstate Corp. erupted in the battle over the company's latest request for property- insurance rate increases of up to 42%, with regulators abruptly ending a hearing with company executives in Tallahassee, the state capital.
Regulators accused the company of failing to comply with a subpoena issued in October. In it, Florida Insurance Commissioner Kevin McCarty demanded documents detailing Allstate's relationship to insurance trade groups, risk-modelers and ratings agencies as part of an inquiry into why insurance overhauls passed by the legislature last year, including the expansion of a taxpayer-backed state catastrophe fund, have failed to produce lower property-insurance rates for many homeowners.
Mr. McCarty said the company faces the risk of fines, suspension or revocation of its license to sell policies in the state -- possibly including automobile insurance -- if it fails to comply. In the event of a suspension or revocation, the company would be unable to sell new policies but would have to service existing ones. Allstate is the state's fourth-largest insurer of homes, with about 241,000 policies in force, said Edward Domansky, a spokesman for the commissioner, who added that Allstate hasn't been writing new homeowner policies in the state for a while. As Allstate also insures about 1.7 million automobiles in Florida, whatever action the regulator takes is likely to affect that business.
An announcement of action against Allstate is expected today, said Tom Zutell, a spokesman for Mr. McCarty.
A spokesman for Allstate Floridian Insurance Co., a subsidiary of Allstate Corp., said the company had tried to cooperate with regulators, but needed more time to provide more information.
"From our standpoint we have been in compliance," said Adam Shores, an Allstate spokesman. He said the company had since withdrawn its rate request pending further discussions with the Florida Office of Insurance Regulation. He said the company isn't receiving an adequate premium in the state to cover its risk of loss from hurricanes.
"Allstate did provide some documents, but refused to provide documents specifically related to their communications with catastrophe modeling companies, insurance rating organizations and insurance trade associations," said Office of Insurance Regulation General Counsel Steve Parton.
Mr. McCarty said he planned to bring Allstate back when it had answers to questions in its subpoena.
