Fla. Consumer Advocate: Allstate Rate Hike Requests Exaggerated 

Florida’s insurance consumer advocate told regulators Allstate’s Castle Key subsidiaries do not need the double-digit rate increases they are asking the state to approve.

Actuaries with the advocate’s office questioned the insurer about its stated need for a 33 percent increase for Castle Key Insurance and 18 percent increase for Castle Key Indemnity—the subsidiary writing new business in Florida.

Castle Key Insurance needs a 14.4 percent rate increase and Castle Key Indemnity does not need an increase, said Insurance Consumer Advocate Sean Michael Shaw. His office came up with much lower general expenses than did Allstate, Mr. Shaw said.

“We had a much lower hurricane loss adjustment,” Mr. Shaw told NU Online News Service. “We think they are overreacting to recent trends. We don’t expect them to continue.”

Allstate has said its loss expenses are exceeding premiums and the company needs the rate increases to offset reinsurance costs and claims expenses.

Castle Key has not received a rate increase in five years.

The rate requests will be mulled by the Office of Insurance Regulation (OIR), which has butted heads with Allstate before. Two years ago the OIR and Allstate reached an agreement to settle a long dispute over regulators’ requests for more documents related to a rate request. At one point the OIR suspended Allstate’s license to do business in Florida.

Allstate paid $5 million to resolve legal issues from the argument and agreed to lower homeowners insurance rates by 5.6 percent. The insurer also agreed to write 100,000 new policies by November 2011.

Allstate then renamed its Florida subsidiaries to Castle Key in order to make it clear they were separately capitalized from Allstate Insurance Co.

• • 7/29/2010 7:36:32 AM
  • Frank Cacchione
  • Misguided Consumer Advocate
  • I wonder where the Florida Consumer Advocate will be when the inevitable major storm hits Florida causing the insolvency of many of these companies. I always thought the first princi[ple of Consumer Advocacy was to assure the solvency of insurers so that claims could be paid to trusting homeowners. THey have lost their bearing in Florida for the political sake of temporary premium relief.

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