The Florida Office of Insurance Regulation said that for the second time this week, it has approved rates for a large homeowners insurer that are substantially below what was initially requested.
OIR said it authorized a revised overall rate increase filing of 16.3 percent for United Services Automobile Association and USAA Casualty Insurance Company after the carriers originally sought a 40 percent hike.
Earlier, the OIR approved revised rate filings submitted by Allstate Floridian Insurance Company and Allstate Floridian Indemnity Company of 8.2 percent for each. Allstate Floridian and Allstate Indemnity originally requested average statewide increases of 22.5 and 33.2 percent, respectively.
The revised rate filings followed public hearings at which regulators questioned insurer profit-loading factors such as the cost for reinsurance, an OIR spokesman said.
The hearing for USAA and USAA Casualty was held Sept. 26, and after the OIR issued a notice of intent to disapprove the filing, the company amended its filing and lowered the overall rate requests.
OIR cited a number of areas where the requests were not adequately supported, including USAA's and USAA Casualty's use of an outdated private catastrophe model and failure to support an additional profit load of 10 percent.
“While the rate I approved is far less than what the company originally requested, I am fully aware that it is still going to have a significant impact on the pocketbooks of USAA's policyholders,” said Insurance Commissioner Kevin McCarty.
The approved rate changes for all the companies are effective for new and renewal business as of mid February.
Allstate companies were the subject of a public hearing on Nov. 2, which led it to amend its filing and lower the rate requests to 19.1 percent for Allstate Floridian and to 26.4 percent for Allstate Indemnity.
With both the original filing and the amended filing, the OIR cited a number of areas where the requests were not adequately supported.
OIR said Allstate had asked to charge for reinsurance that it had not yet purchased, “seeking to use any unexpected gains produced by policyholder premiums to further compensate its agents rather than policyholders, and increasing its expense ratio, despite the fact it is cutting 240,000 policies.”
“There was little or no support for numerous aspects of this rate hike in both the original filing and in the amended filing,” said Commissioner McCarty, “and the responses we received at the public hearing were not much better. However, these filings reflect rates that the Office determined were justified.”
Allstate Floridian last increased its rates by a statewide average of 16.3 percent, while Allstate Indemnity last boosted its rates by a statewide average of 24.4 percent in October 2005.
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