Florida's Chief Financial Officer Tom Gallagher announced today that a review of Allstate Floridian Insurance Company's request for a 28.2 percent average increase in homeowners' rates found "deficiencies and raises troubling questions about the company's motives in seeking rate increases."
He charged that Allstate's Florida company had tried to justify raises in local rates based on Allstate losses in other states.
In response, company spokesman Ryan Priest said the company believes its request is "necessary, justified and legal."
Both Mr. Gallagher and Mr. Priest voiced their opinions in advance of a public hearing in Orlando, Fla. on the rate request. A second hearing is scheduled for Monday in Davie, Fla.
Mr. Priest said the 28.2 rate was an average and would be higher in some counties and lower in others.
"The numbers do not add up," said Mr. Gallagher, "It is becoming clear that their request for a rate increase is unjustified, and I think they need to reconsider their decision to raise rates on their policyholders. Allstate customers deserve accountability from their insurance provider."
Mr. Gallagher said in his statement that he is requesting that Allstate customers apply pressure to the company by participating in the public hearings to review the rate requests.
He said deficiencies in Allstate's rate request were discovered after an independent review was carried out by Gallagher's Consumer Advocate's Office.
The independent review examined Allstate Floridian Insurance Company and its affiliated company, Allstate Indemnity. Both requests were submitted to Insurance Commissioner Kevin McCarty, who oversees the Office of Insurance Regulation and regulates insurance rates.
Based on the conclusions of the report, Mr. Gallagher said it was determined that the Allstate Florida-only companies were attempting to justify their rates based on losses from other states.
In addition, he said, Allstate Floridian did not adequately document how non-renewing 95,000 Floridians–a substantial reduction in exposure–impacts their rate request.
Finally, Mr. Gallagher said, the report revealed that the companies are asking for an increase for reinsurance that is out of proportion with their previous rate requests.
Mr. Gallagher said that Consumer Advocate Steve Burgess would present the findings of the independent review during today's hearing.
Mr. Priest said the company disagreed with Mr. Gallagher's statements and, "We believe the rate we requested is justified and that's why were going to the public hearing today."
He said the company would be explaining "about the unique situation in the Florida property market and the challenges companies face when it comes to continuing to provide service to the homeowners market.
"We understand rate increases are not popular, but in order for us to continue to serve our customers we believe this request necessary, justified and legal."
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