Florida Ups Stakes In Battle With Allstate

Seen at wsj.com (subscriber link):

Raising the stakes in the battle between insurance regulators and property insurers in the influential state of Florida, the state’s insurance commissioner took the unusual step of suspending Allstate Corp.’s license to sell auto insurance in the state in retaliation for the company’s alleged failure to fully respond to a subpoena for information about its homeowner insurance.[...]

The Florida Office of Insurance Regulation is clarifying that the suspension applies only to new automobile policies written by three of five Allstate subsidiaries operating in Florida. Two other subsidiaries that still write homeowner insurance are not affected.

Insurance Commissioner Kevin McCarty suspended Allstate’s license after he said the insurer failed to fully comply with a subpoena issued by his office in October demanding that the company provide information about its communications with insurance trade groups, risk modelers, and ratings agencies in connection with its request for premium increases in homeowner insurance of up to 42%. Mr. McCarty abruptly ended hearings scheduled yesterday at the state capital in Tallahassee, Florida after the insurer balked at answering some questions and didn’t produce all the documents requested.[...]

“They can’t remove themselves from homeowner and keep their most profitable line,” said spokesman Ed Domansky at the Florida Office of Insurance Regulation.

I don’t have any connection to Allstate.  Therefore, I can only guess at what their cat risk aggregation looks like in Florida, even after recent actions.   However, I can imagine scenarios where giving up a profitable auto book as the price to improve some nightmarish storm scenarios wouldn’t be a bad call, especially in light of a softening auto insurance market.

Having said that — reasonable government relations folks at most insurers will tell you, even when the DOI seems unreasonable, a certain level of submissive compliance should be maintained.  Hell hath no fury like that of a defied Commissioner.