Yesterday, I commented on the legal problems confronting Allstate in Missouri over its refusal to release a controversial consultants' report that some charge prompted the "good hands" people to flash their fists at claimants. Now the battle has spilled over into Florida, where Allstate has seen its authority to write new business suspended entirely in a confrontation over property insurance rates. The Florida commissioner is asking to see that same McKinsey report, which must contain some pretty damning evidence to be guarded so jealously by Allstate.
(Click here for our news story on the document war. And click here to read about how Allstate was able to get a court to stay the suspension and put the burden on the insurance department to prove their action is constitutional and proper.)
There was a ton of confusion this week after the Florida insurance department issued its order suspending Allstate's certificate of authority. First it appeared to cover all lines of business. Then, it appeared to be only auto insurance. Later, the department clarified that its initial order indeed only related to auto policies, but then expanded its suspension to all lines.
Which side will blink in this showdown? If Allstate's behavior in Missouri is any indication, I would advise Florida Insurance Commissioner Kevin McCarty not to hold his breath. The content of these McKinsey documents must be explosive for Allstate to defy a judge's orders and absorb fines of $25,000 a day in Missouri rather than hand them over in a civil lawsuit. (The carrier contends the documents are proprietary trade secrets, and will not release them into the public domain.)
Is Florida cutting off its nose to spite its face by shutting Allstate down? On homeowners (the department's prime concern in its probe of why its reform law--giving out discount reinsurance to carriers such as Allstate--hasn't produced the rate cuts the government promised consumers), the suspension doesn't make much difference, because Allstate was looking to cut back there anyway. But losing the auto market in the Sunshine State has got to hurt.
But does it hurt enough to force Allstate to cry 'Uncle'? Stay tuned!
Comments (1)
I was reading the day's NU daily e-newsletter, as always, and in particular what's happening with Allstate down in Florida.
One thought occurred to me. This is one of the paragraphs:
"His order of suspension today revealed that the subpoena items sought 'were carefully crafted by the Office to gather information related to Allstate’s improper claims-handling processes and to assist the Office in assessing the extent to which Allstate is causing harm to Florida consumers.'”
Isn't the insurance department supposed to investigate in an unbiased manner?
It seems to me that what they did was 'carefully craft' something with a pre-determined conclusion, and it should not really surprise them that Allstate won't help them on their witch hunt.
If they said, 'we want to determine what effect this is having on the people of Florida,' that would at least suggest they are looking into things in a fair manner, but this sounds like they really and truly expect Allstate to commit suicide.
Posted by Aaron Stein | January 18, 2008 4:44 PM
Posted on January 18, 2008 16:44