Yo Allstate: Florida Isn’t Amused OIR Moves to Ban Allstate

Earlier this week there was some improtant developments involving Florida’s battle with Allstate. As we have repeatedly noted in our continuing coverage of Allstate there is a pattern of behavior exhibited by this insurance giant of ignoring lawful subpoenas and court orders. Worse according to the Florida Office of Insurance Regulation complaint:

Encompass Floridian Insurance Company’s chief executive officer knowingly made and filed a false certification…..

This charge involves a certification on the rate filing that the CEO of the operating company has reviewed the entire application. When sworn under oath the CEO of Allstate’s Florida subsidiary admitted he signed the document only reviwing the execuitive summary and thus was unable to answer detailed questions by the Florida Senate committee.

To put this into context this was the type of defense by ignorance used by Ken Lay at Enron (the three wise monkeys). It resulted in CEO’s and CFO’s being required by Sarbanes-Oxley to affirmatively certify their companies financial information submitted to the Securities and Exchange Commission. Here is a link to Thomas Wilson certifing the last quarterly corporate financial statement and in the process doing what the CEO of his Florida subsidiary did not do, reading and certifing that an important document is accurate and complete. I now wonder if those internal controls Mr. Wilson swore were working on October 30, 2007 really are in light of the FLOIR Complaint. After all a good system of internal controls include those which insure compliance with applicable laws and regulations.

In any event here is the press release from Commissioner McCarty’s office for our readers to consider. Events in Florida are heating up and as pointed out elsewhere by Mr CLS could directly tie into the shareholder derivative suit styled Fojas v. Ackerman.

Florida Insurance Commissioner Kevin McCarty today announced that the Office of Insurance Regulation (Office) has filed an administrative complaint on a non-emergency basis seeking to suspend the certificates of authority of the Allstate Companies (Allstate) to write new insurance policies in Florida.

The complaint is based in part on Allstate’s failure to provide witnesses and documents as subpoenaed by the Office; falsely labeling subpoenaed documents as trade secret and falsely certifying its rate filings.

“Seeking to suspend a company’s license is not something we take lightly,” said General Counsel Steve Parton. “However, in light of their defiance of the Florida Insurance Code, we think it is necessary to make the point that actions such as we have seen by Allstate will not be tolerated.”

Allstate was to have provided all appropriate company documents related to the Office’s investigation at or before the Jan. 15 hearing. Instead, in late November, Allstate filed 51 pages of objections to the subpoenas. Allstate has been delivering documents to the Office since the Jan. 15 hearing, but has not delivered all documents requested by the subpoenas and is maintaining claims of privilege to some of the documents.

The Office has been asking for documents about Allstate’s reinsurance program, its relationships with risk modeling companies, insurance rating organizations and insurance trade associations. The subpoenas also required appropriate witnesses to appear at the January hearing to be able to discuss issues that were subjects of the subpoenas.

The complaint also alleges that Allstate has violated Florida law by not properly certifying its rate filings as required by House Bill 1A, which passed in January 2007.

Filing the complaint is required under Florida law as part of the process that began when Commissioner McCarty issued the Immediate Final Order (IFO) Jan. 17, suspending Allstate from writing any new business in Florida. Allstate is expected to request an administrative hearing on the Office’s complaint. If requested, a hearing would be held at the Division of Administrative Hearings (DOAH).

An administrative law judge will hear the evidence and then make findings of fact. Commissioner McCarty could then issue a Final Order, which may include a suspension of Allstate’s certificates of authority. Allstate could then appeal to the First District Court of Appeal.

The DOAH hearing is separate from the ongoing matter that Allstate initiated in the First District Court of Appeal (DCA) by filing its Jan. 17 notice of appeal of the commissioner’s IFO. That matter is still proceeding in the DCA.

The Allstate suspension was the first time the Office had suspended a company for failure to “freely” provide documents as required by Florida law.

The Order would apply to all Allstate companies on which the subpoenas were served:

Allstate
Floridian Insurance Co.
Allstate Indemnity Co.
Allstate Property &
Casualty Insurance Co.
Allstate Insurance Co.
Allstate Floridian
Indemnity Co.
Allstate Fire and Casualty Insurance Co.
Encompass
Insurance Co. of America
Encompass Indemnity Co.
Encompass Floridian
Insurance Co.
Encompass Floridian Indemnity Co. A copy of the subpoena is available
to review.

sop

4 thoughts on “Yo Allstate: Florida Isn’t Amused OIR Moves to Ban Allstate”

  1. It reminded me of a recent document I saw coming out of the Florida AG office. They seem to excel in using points of bureaucracy to go for the juggler.

    It is these situations make me laugh when insurers say they want Federal Regulation. It’s no fun when a large state like Florida gets serious, but they have no idea how bad it will be when the Feds do it to them.

    Why do they think that everyone tried so hard in the 70s and early 80s to get out from under Federal over-site?

    And with so many financial institutions now looking for the Feds to bale them out of their previous poor decisions (including parts of the insurance industry), it is likely there is going to be a lot more like this battle down the road. And if Allstate hasn’t figured it out yet- fighting the government is a losing proposition.

  2. Here is the document I was referring to:

    http://tinyurl.com/2zkkjo

    It involves a Florida lawyer who is into the Debt Adjusting Racket in a number of different states. Has more to do with personal financial issues then insurance. But it is interesting.

  3. Pardners at least the politicians in Florida actually seem to care about the common folk living there unlike Mississippi where the Republican party is too busy collectin’ corporate cash and handin’ out contracts to Haley Barbour’s relatives. There are too many sheeple in Mississippi that gets side tracked by BS issues like immigration that are designed to stir up fear in the finest Klan traditions of the 1960s while Republican politicians, their relatives and supporters laugh all the way to the bank. Nice picture of Mr Biggles by the way pardner.

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