Ms. Moore said that while the approved rates give the insurers better financial footing, "losses and expenses continue to exceed premiums. Costs associated with paying homeowners claims rise," and reinsurance remains costly.

"If this trend continues, we may need to reevaluate rates in the future," Ms. Moore said.

Castle Key Insurance had originally asked for a 33.3 percent increase. Castle Key Indemnity wanted a 17.9 percent hike. Allstate said it needed the increases to offset reinsurance costs and claims expenses for fires, thefts and storms.

The OIR said that although sinkhole expenses have been identified as a significant cost-driver for insurers in Florida, this particular rate increase was not driven primarily by sinkhole losses.

The OIR is holding a public hearing today to discuss a rate increase request from the state-run Citizens Property Insurance Corp., which did factor in sinkhole losses into its rates.

Citizens' proposed statewide average rate increases are from 6.1 percent to 10.9 percent depending on the line of coverage.

Castle Key's increases begin Nov. 28 for new and renewal business.

The company will no longer offer voluntary discounts to its hurricane portion of the premium, according to the OIR. The discounts include those for fire and burglar devices, multiline discounts, and discounts for policyholders 55 years old and retired. Allstate will continue to apply the discounts to the non-hurricane portion of the premium, the OIR said.

In 2009 Castle Key Insurance reported a net loss of nearly $4 million while Castle Key Indemnity posted net income of $551,121–less than half of what the subsidiary earned in 2005 as profits have steadily decreased since then, according to Highline Data, a part of Summit Business Media. Castle Key Insurance has not reported a profit since 2006. In 2008 the company took a $50.4 million loss, and in 2007 it was about $42.3 million in the red, with combined ratios of 240.1 and 274.6, respectively.