TALLAHASSEE -- Cranking up the heat, Florida regulators will suspend Allstate's license to sell auto insurance in the state until the company cooperates with an investigation into why its homeowners rates haven't fallen.
It's an unprecedented move for the state Office of Insurance Regulation, which is on the warpath because homeowners' premiums are still high despite passage of an insurance overhaul law in January 2007. The office is seeking information concerning how Allstate sets its rates and pays claims, and the company has refused to provide it.
''This is an ongoing and blatant disregard for the laws of the state of Florida. This can't and won't continue,'' Insurance Commissioner Kevin McCarty said Wednesday.
The move sends a powerful message to the rest of Florida's insurance industry that rates must come down. Already, regulators and a special Senate panel have subpoenaed other insurers, and Gov. Charlie Crist has threatened a class-action lawsuit to compel the companies to provide insurance relief to homeowners.
The state's action against Allstate is expected to cause minimal financial pain for the company, especially if the ban is brief, because existing policies are exempted. Allstate customers can renew, and consumers looking for carriers will be able to find another insurer in Florida's highly competitive auto insurance market.
The biggest losers will be Allstate's agents, who will miss out on lucrative new business. Also taking a blow: Florida's reputation as an industry-friendly state.
''It's a big game of chicken,'' said Jay Brown, a lawyer with Houston's Beirne, Maynard and Parsons who does insurance litigation work. ``The last thing the state or Allstate wants is to lose a carrier from the auto insurance market.''
Joseph Dawson, of Dawson & Finkelstein, whose practice specializes in insurance litigation, said absent a circuit court ruling reversing McCarty's decision, Allstate will have to stop selling new auto policies in Florida.
Allstate is still weighing its options, said Adam Shores, a company spokesman.
The Office of Insurance Regulation's order is effective when it is delivered to Allstate's parent company in Northbrook, Ill. The order was expected to be ready by Thursday morning.
The ban is in effect until Allstate complies with the office's subpoena.
''Our goal is to bring insurers into the state, and so I regret that Allstate put McCarty in this position,'' said Senate Minority Leader Steve Geller, D-Cooper City. ``But we have to show the insurance industry that they are not the ones in charge, and they must comply with the laws of Florida.''
Speaking as somebody who has never had a (house) insurance claim that lives in a relatively safe area from hurricanes but whose insurance has quadrupled anyway, I'd like some answers, please.
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