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Allstate Subsidiaries Seeking Substantial Rate Increases

Now it’s Allstate’s turn…A few days ago we discussed how State Farm Insurance Co., which is Florida’s second largest homeowner’s insurer with about 467,000 policyholders and almost an 8 percent market share is seeking approval for a 14.9 percent statewide average increase of premiums. According to the insurancejournal.com, it has not taken long for two Allstate subsidiaries, Castle Key Insurance Company and Castle Key Indemnity Company, to request an even higher rate increase: 32.7 percent and 21.9 percent respectively. Together, these companies underwrite about 250,000 homes.

Why the Rate Increases?

Both companies claim to have lost $217 million between the years 2007 and 2011, which has reduced their surplus and, thus, their ability to pay future claims by $88 million, from $206.6 million to $117,5 million. And these losses have occurred despite the fact that no claims for hurricane damages have been paid in the last few years and that both companies have reduced the number of policies they are underwriting in Florida.

Hence the questioning by state regulators…Company officials are blaming underwriting losses for the significant drainage of their coffers. However, regulators have questioned both companies’ practice to pay their agents 12.6 percent in commissions for new homeowners policies, instead of the 11.5 percent paid for auto policies. Yet, the companies have defended their practice of rewarding agents at a higher rate for homeowners policies because of the complexities of Florida’s property market, which in turn make agents spend much more time explaining those complexities to the policyholders.

No Savings On Recent Legislation

Another thing that state regulators have questioned is the insurers’ failure to include in their numbers any savings of those expected from legislation enacted last year, like the new 2 year statute of limitations for sinkhole claims and the new higher rates for sinkhole coverage. However, company officials claim that up until now the effect of the new statute of limitations has been that as policyholders become aware of the statute, more claims are been reporter sooner, causing a larger financial burden on their companies sooner than expected…

Significant Rate Increases

While the Office of Insurance Consumer Advocate General Counsel Brian Deffenbaugh recognizes that insurance companies have seen significant losses and admits that some rate increase is needed, it questions whether individual policyholder increases should be capped. However, it is important to note that should the requested rate increases be approved as filed, Castle Key policyholders in the Florida Panhandle will suffer a 50 percent increase, with a 40 percent increase being requested for policyholders in Hillsborough, St. Lucie and Martin counties, while Palm Beach County would see a 30 percent increase.

The Lawyers of Greenberg Stone and Urbano Can Help

Regardless of what kind of coverage you would like to see included in your homeowners insurance policy, you should have an attorney help you review your policy and advise you on what coverage you should have and for how much. Visit our website to learn more about our firm and contact us today for a free consultation.

With more than 67 years of combined experience, the Miami Dade County Homeowners Insurance Claims Law Offices of Greenberg Stone and Urbano have helped thousands of homeowners all over Florida review their policies, present their claims and get the compensation owed them by their insurance carrier.

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