Hawaii's fifth-largest auto insurer, Allstate, will receive a cease-and-desist order from the state insurance commissioner for its purported plan to lay off 21 employees from its Hawaii claims office and close its legal office, terminating an additional two employees.

“;We are going to have continued discussions regarding what exactly they are doing,”; said Insurance Commissioner J.P. Schmidt after meeting with Allstate representatives yesterday afternoon.

Word initially circulated that the claims and legal offices in Hawaii would both shut down.

However, “;the claims office is not closing,”; said Allstate spokesman Mike Siemienas.

“;Allstate is reducing its claims staffing in Hawaii. This action will be seamless to customers because this announcement only affects adjusters who work with clients over the phone,”; he said. Field adjusters who meet with clients are not affected, he said. He did not have the number of employees that would remain in Hawaii.

Both employees in the Hawaii Allstate legal office also are to be laid off.

“;We are closing the staff counsel office in Honolulu. The work handled by this office will be handled by other offices ... or there are cases where we may use outside counsel,”; Siemienas said.

Allstate primarily provides homeowners' and auto insurance in Hawaii, Schmidt said.

The state insurance code requires the company to have a “;complete claims service office in the state.”;

“;As with many companies, they may need to have some reductions in personnel during this difficult economy, but they still need to stay in compliance with the insurance code,”; Schmidt said.

“;We are sending them a letter to cease and desist until we have worked out the proper procedure and make sure everything is in compliance with the insurance code.”;