McCarty versus Allstate

We believe Florida Insurance Commissioner Kevin McCarty made the right call when he suspended the Allstate Cos. ability to write new business in the state.

McCarty took the action after Allstate failed to produce some of the documents subpoenaed for a hearing held Jan. 15 to investigate why the company wanted to raise homeowners rates in the face of last year’s legislation designed to help companies reduce rates. McCarty terminated the hearing after it convened, calling it unproductive. Later in the week, he ordered Allstate’s suspension, which a state appeals court later lifted. By Friday afternoon, the Good Hands company was back in business.

Allstate said it withheld some documents because they contain trade secrets, which the company feared might become public. The excuse doesn’t hold water because, as regulators pointed out, the Office of Insurance Regulation routinely handles such documents. Never has there been a claim that OIR divulged any trade secrets.

McCarty and his office now must defend the suspension in court.  Whether the court ultimately will up hold the state’s position or rule in favor of Allstate is beyond our ability to forecast.

Even if the court shoots down the suspension, McCarty at least has sent a message to insurers that they don’t have free rein to set rates.

But we do offer a word of caution. There is a fine line between regulation and overregulation. It’s tempting to bash the insurance industry, considering what’s happened to homeowners insurance rates over the past decade-plus. But bashing for the sake of bashing won’t help Florida’s battered consumers one bit.

So far, it appear McCarty and his office are on the right side of that line. We hope they stay there.