Sam Miller, executive vice president of the Florida Insurance Council, said the move bodes well for the overall state of the Florida insurance market in that these policies will not be fed into the state's residual market.

“It is clear that Florida is now becoming a state that is more dependent on small and midsized insurers,” he said.

Mr. Lawson noted that although Royal Palm is not an Allstate affiliate, customers who accept Royal Palm's offer will be able to continue to work with their Allstate agency and may contact that agency for more information on their specific homeowner's policy.

Allstate agents have been able to write new property insurance with up to 12 other companies besides Allstate Floridian, the subsidiary of the Northbrook, Ill.-based Allstate, the nation's second largest personal lines writer.

Last year Allstate announced a similar agreement for 95,000 customers with Universal Insurance Holdings Inc. of Fort Lauderdale.

Allstate has joined other major writers such as Nationwide in not only setting up Florida subsidiaries in the wake of Hurricane Andrew, but also drastically cutting back their catastrophe exposure after last year's losses.

Even with the Royal Palm move, however, Allstate said it will still be underwriting hundreds of thousands of Florida homeowner policies.