Allstate gets rate increase

Oct 3, 2012

The following article was published in the South Florida Sun Sentinel on October 2. 2012:

Allstate gets rate increase

By Doreen Hemlock

State regulators have approved rate increases topping 8 percent for two more home insurers: Universal and Allstate.

That’s after a 6 percent increase on home insurance policies for State Farm and another hike expected this week for state-backed Citizens Property Insurance, Florida’s largest home insurer.

Universal, the state’s second-largest insurer of homes, was granted an average 23 percent rate increase, bringing the average cost for its homeowner policies to $2,170, said the Office of Insurance Regulation.

Allstate’s Castle Key Insurance received an average 14.9 percent increase, and its Castle Key Indemnity an average 8.2 percent increase, bringing their average policy premiums to about $1,400 a year. Allstate’s units combined rank as the state’s No. 4 insurer after State Farm, Florida data shows.

Amounts paid on individual policies vary widely from the average. South Florida homeowners generally pay more because of higher hurricane risk than other parts of the state, experts say.

Increases also vary based on type of policy. For example, Castle Key Insurance was granted a 12.9 increase on insurance for homes and a 34.1 percent raise on policies for condominiums.

Insurers say increases are needed, because companies are paying out more in claims and expenses than they take in from premiums. One reason: rising costs for re-insurance, the insurance that the companies buy from global firms.

Re-insurers are charging more after costly disasters worldwide, such has last year’s tsunami in Japan, according to the Insurance Information Institute, an industry trade group.

Universal’s rate increase was about the same as its request.

Allstate’s Castle Key Insurance had sought a 32.7 percent increase, while Castle Key Indemnity had asked for a 21.9 percent raise.

Allstate’s units also had received rate increases on home insurance last year and in 2010. Castle Key Insurance received a 14.5 percent raise last year and 18.7 percent in 2010. Castle Key Indemnity was approved for a 35.7 percent hike last year and 17.8 percent raise in 2010.

Meanwhile, Citizens is asking for an 11 percent raise, plus approval to shed some 300,000 policyholders to slash its risk.

But Citizens’ plans to cut nearly one in four customers sparked questions Monday from Robin Wescott, the state’s insurance consumer advocate.

In a letter to Citizens’ chief, she asked for details on how Citizens came up with its numbers on shedding customers and requested some alternate scenarios.

That query prompted an outcry from Tom Feeney, president of the Associated Industries of Florida, a business group that includes insurance companies as members.

“We are one big hurricane away from financial catastrophe due to the massive hurricane taxes that will be foisted on virtually every insurance policyholder in the state,” Feeney said in a statement. “To delay implementation any further would be tantamount to financial malfeasance.”

But at least one independent insurance agent questioned the haste, when many of the companies being asked to take on Citizens’ customers are young and have limited capital. Those companies generally will charge customers more than Citizens does now. And if a hurricane hits, like Citizens, many likely will turn to the state’s financial back-stop: the Florida Insurance Guaranty Association, also known as FIGA.

“Where’s the benefit,” asked Ron Kornbluh, president of Brokers Insurance Group of Margate, “if they’re all counting on the Florida Insurance Guaranty Association to be the safety net?”

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