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Florida okays double-digit rate increases for Allstate homeowners insurance units

State insurance regulators on Friday approved double-digit rate increases for homeowners covered by Allstate's Florida subsidiary, the Castle Key Group.

The Florida Office of Insurance Regulation approved an average increase of 18.7 percent for Castle Key Insurance policyholders and an average increase of 17.8 percent for Castle Key Indemnity policyholders.

In addition to higher rates, some Allstate customers will be paying even more due to lost discounts.

Regulators said that the insurer will no longer apply certain voluntary discounts to the hurricane portion of their premium, which could result in a higher premium. Among those removed are discounts for retirees, installing fire and burglar devices, holding multiline auto and home policies, and buying a new home. Going forward, those discounts would only be applied to the non-hurricane portion of the premium.

Despite several mild years on the hurricane front, property insurers have argued their costs are still rising, making it difficult to do business in Florida. Atlanta-based insurer Cotton States recently filed to pull out of the state after 50 years here.

Florida Insurance Commissioner Kevin McCarty has endorsed sizeable rate increases for many.

Meanwhile, major insurers such as State Farm and Nationwide have shed thousands of policies, adding to the burdens on state-run Citizens Property Insurance. Citizens, which covers homeowners who cannot find coverage on the open market, wants to raise average rates between 6 percent to 11 percent, depending on the type of policy. Regulators on Friday said they will hold a hearing on the request Sept. 7.

Even after a major retraction, Allstate remains one of the top five property insurers in Florida with 230,000 policies statewide in its combined Castle Key units. Only Castle Key Indemnity, which accounts for about a third of those policies, is accepting new business.

The company originally sought increases of 33.3 percent for Castle Key Insurance and 17.9 percent for Castle Key Indemnity customers. In pushing for the hike, the insurer said it has not had a significant rate increase in five years, and higher premiums are needed to keep pace with expenses. In particular, it cited higher non-hurricane losses and increased reinsurance costs.

Jack McDermott, a spokesman for McCarty's office, said Allstate has agreed to the decision.

Allstate spokeswoman Amy Moore acknowledged the higher rates will provide better financial stability but said the solution was only short-term.

Receiving a smaller rate increase than requested for Castle Key Insurance "does not allow the company to keep pace with the costs of providing insurance in Florida," Moore said in a statement. "We will continue to work with (state regulators) to find ways to support a platform for the long-term viability and growth for Florida's homeowner insurance market."

The rate increases will begin phasing in for new and renewal business beginning Nov. 28.

Florida okays double-digit rate increases for Allstate homeowners insurance units 09/03/10 [Last modified: Friday, September 3, 2010 11:25pm]
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