Florida Accuses Allstate of Ongoing Crime

Posted on Jan 24, 2008

Allstate Insurance Co. and its affiliates are committing "an ongoing crime" by failing to submit all documents the state demanded as part of an investigation of homeowner insurance prices, according to a legal response state officials filed to an appeals court Wednesday.

"There can be no more clearer threat to the safety and welfare of the public than a continuing willful violation of the law," Office of Insurance Regulation officials wrote to the First District Court of Appeal to justify barring 10 Allstate companies from selling new insurance policies in Florida.

Allstate's failure to turn over all the documents led Florida Insurance Commissioner Kevin McCarty to cancel a hearing last week investigating the insurer and to suspend 10 Allstate companies' licenses to do business statewide. He said this action — the first of its kind for his office and the state's boldest move in a long-simmering feud with property insurers — was the only way he could effectively pressure Allstate into providing the records.

The appeals court is expected to decide in the next few days whether the ban should apply temporarily until a judge makes a final decision. To sway the court on the temporary ban, state officials must sufficiently prove that allowing Allstate to sell insurance presents an "immediate threat" to the well-being of Florida residents.

Last week, Allstate appealed to the court with strong language of its own: The Office of Insurance Regulation "has abused its power" by using the ban as a "punitive stick," according to court documents. Allstate claims that regulators failed to give the companies prior notice or a hearing. It says in the appeal that it may try to force the state to pay attorneys' fees.

State officials countered in their court response that Allstate had a chance to provide subpoenaed documents and knowledgeable witnesses at the hearing last week.

"Instead, it became abundantly clear that Allstate's corporate representatives were unaware of what documents, if any, had been produced to the Office, had no reasonable explanation for their failure to make the requested documents freely available, and were otherwise unprepared to answer questions" at the hearing, according to the state's response.

Gov. Charlie Crist said Tuesday that elected officials need to continue holding insurers accountable.

The Allstate companies "snubbed their noses at the people of the state of Florida by gouging them, in my opinion. They snubbed their noses at the administration trying to enforce the new law," Crist told reporters in Tallahassee. "We have to fight for the people against this industry taking advantage of them. … Some in the industry have been good. But in Allstate's case, they're not good hands, they're bad hands."

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