Florida blocks new Allstate policies

Allstate Corp., seeking rate increases of as much as 42 percent in Florida, was barred from selling new policies in the state after failing to provide documents sought by regulators probing possible collusion.

Florida Insurance Commissioner Kevin McCarty last year subpoenaed insurers, including Allstate, for records of their reinsurance programs and relationships with trade groups and risk-modeling and rating companies. Northbrook-based Allstate missed Tuesday's deadline to produce materials detailing how it sets prices and resolves claims, McCarty said in a statement Wednesday.

"In view of Allstate's ongoing, blatant disregard of our subpoenas, I have little choice but to take action that will send a clear message," McCarty said. Existing policyholders won't be affected, he said.

Florida is trying to lower home insurance rates that soared after record hurricane seasons in 2004 and 2005. Allstate has been shedding residential customers in Florida since 2004 while expanding its auto business in the state, which accounts for about 10 percent of its car policy sales.

"We stand by our business practices in this state," said Allstate spokesman Adam Shores. "We're working to find solutions to these problems just like regulators are."

Allstate, the largest publicly traded U.S. home and auto insurer, fell 24 cents, or 0.5 percent, to $50.93 in New York Stock Exchange composite trading. The stock has declined 21 percent in the past 12 months, compared with the 11 percent drop of the 24-member KBW Insurance Index.

"This is largely a case of gamesmanship," said Thomas Cholnoky, an analyst at Goldman Sachs Group Inc. in a note to investors Wednesday. "It is unlikely Allstate would actually lose its ability to permanently write auto insurance in the state."

McCarty's office is investigating possible collusion between insurers, risk modelers and rating organizations. Insurers base their prices in part on forecasts from the modeling agencies and financial-reserve guidelines from rating companies. Florida also subpoenaed State Farm Mutual Automobile Insurance Co., Cincinnati Financial Corp. and Auto-Owners Insurance Co.

State Farm agreed Oct. 1 to lower homeowners' rates by about 9 percent and assist with the state's probe.