It's usually a contest where nobody gets hurt. The two sides check the balance sheets, gauge the potential damage, and then one backs off.
Not this time. Not with insurance colossus Allstate in the fight. Seasoned insurance industry watchers say they've never seen the game played out this far.
Unless a last-minute deal is brokered or a court steps in, as early as today Florida could do something no state has done before: slap handcuffs on a major insurance company. Not because it can't pay claims. Allstate had a 2007 profits of $4.6-billion.
It's because Allstate refuses to open its books.
That will likely send a message to the rest of the industry, analysts say, that hurricanes aren't the only reason Florida is a risky place to do business.
The state's second-largest auto and fourth-largest property insurer was suspended in January from selling new policies of any kind in Florida. Regulators want Allstate to turn over documents showing how it sets homeowner rates. Allstate claims those records are trade secrets.
Allstate got the suspension lifted, but two weeks ago, the 1st District Court of Appeal sided with the state Office of Insurance Regulation. Unless the court stands in the way again, the state can enforce the suspension.
Won't hurt right away
What would that mean?
A suspension won't hurt Allstate right away, industry experts say. About 90 percent of an insurance company's business is renewals, policies Allstate can continue to write. And it won't hurt other company policyholders, say consumer advocates, because it signals the industry that regulators mean business.
The immediate casualties would include the agents who can't sell anything but Allstate products, and the industry as a whole, which already views Florida as an increasingly toxic environment. The industry points to investigations by Insurance Commissioner Kevin McCarty, and to Florida Senate hearings that laid siege to the industry.
"The insurance industry is the most regulated industry in the state of Florida," reads a report by the Florida Insurance Council, a trade association. "Calling for duplicative hearings before legislative committees and having insurance company executives appear under oath is political grandstanding.
"It's another way that some politicians are trying to make the insurance industry the scapegoat for their own empty, unrealistic and irresponsible political promises."
But some key numbers keep confronting the industry: The estimated $3.7-billion profit the industry made in Florida last year. The more than $2,000 that is the average cost of a homeowner policy in Florida, about twice what it was in 2005.
Dr. Robert Klein of the Center for Risk Management and Insurance Research at Georgia State University said a case where a state suspended an insurance company's license because it wouldn't comply with subpoenas is unprecedented. He said the threat of a suspension is enough. "This is a game of chicken," he said. "They (other states) do think of Florida as a much more difficult regulatory environment. And getting worse."
Allstate is a unique target, Klein said, because unlike State Farm, it is publicly traded. "Allstate has taken probably the most conservative line regarding their willingness to write property insurance in hurricane prone areas," Klein said. "Allstate is very much oriented towards operating like a business."
Allstate used to a fight
Allstate has a way out, said industry critic Robert Hunter, director of insurance for the Consumer Federation of America. "Hand over the documents. I read about Allstate agents saying they might be hurt. Why don't the agents call Allstate?"
Hunter believes Allstate can survive at least in the short term because of its auto business. Although Allstate could lose about 3,500 new auto policies a week statewide, the company has 1.7-million auto policies worth more than $2-billion.
And Allstate is used to a fight, Hunter said. The company is battling California regulators who last month told Allstate to cut auto rates by nearly 16 percent.
"It's not like everything is falling off a cliff,'' Hunter said. "They can continue to renew. Five or six months from now, they might start to feel a pinch. That will hurt a little. But it's not the end of the world."
Unless you're an Allstate agent. Tony Lopez knows what it's like to be forced out. Before moving to Orlando in 2002, he was a State Farm agent in Vineland, N.J. At the time, New Jersey had some of the nation's most rigid rate regulations. "I was constantly in the red,'' he said.
State Farm filed to withdraw from the state in July 2001 and began to cancel about a quarter of its 800,000 auto policies. His business drying up, Lopez and 650 other agents had to move. "I had to leave everything I knew."
The New Jersey market has returned. Now it's the Florida market that's grinding down.
"I've seen it twice now," Lopez said. "I don't need a third time."
Tom Zucco can be reached at email@example.com.