NU Online News Service, July 13, 3:00 p.m. EDT
Two Allstate subsidiaries in Florida are asking regulators to approve 33 percent and 18 percent average statewide rate increases for homeowners insurance based on the fact that loss expenses are exceeding premiums, Allstate said.
Castle Key Insurance is asking for the larger increase. Castle Key Indemnity, the subsidiary writing new business in Florida, is looking for the lesser rate hike.
Allstate spokeswoman Amy Moore said the companies need the increases to offset rising costs of reinsurance and claims expenses for fires, thefts and storms.
Castle Key has not received a rate increase in about five years, Ms. Moore added. She could not speculate on the consequences of not getting the rate increases.
A hearing with the state's Office of Insurance Regulation (OIR) is set for July 27.
The increases would amount to a $412 per year average increase on Castle Key policies and $243 per year on Castle Key Indemnity policies.
A year ago Allstate renamed Allstate Floridian Insurance Co. and Allstate Floridian Indemnity to Castle Key and Castle Key Indemnity to clarify the companies are separately capitalized from Allstate Insurance Co.
Days later A.M Best Co. downgraded the Florida insurance group to B- (Fair) from B+ (Very Good) and attached a negative outlook due to the companies' unprofitable experience and hurricane exposure.
In August 2008 Allstate and Florida regulators reached an agreement to end a long spat over the OIR's request for documents from the company which at one point led to the insurer's suspension.
Allstate Corp. agreed to pay a $5 million fine to resolve legal issues stemming from the argument. The insurer also agreed to lower homeowners insurance rates by 5.6 percent and it was to write 100,000 new policies in Florida by November 2011.
Ms. Moore said Castle Key Indemnity is "more than halfway" to that goal of 100,000 new policies. The insurer is now writing new policies on homes one mile and farther from the coastline–changed from a previous distance of five miles–so long as homes meet Castle Key's other underwriting guidelines.
Castle Key Indemnity is also considering taking policies from the state's residual market, Citizens Property Insurance Co., Ms. Moore said.
Castle Key is the sixth-largest homeowners insurer in Florida. Castle Key Indemnity is 22nd, based on 2008 data from the OIR.
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