rejects Allstate Floridian bid to boost homeowner insurance rates
sought to raise premiums 43.4% statewide
Article Courtesy of The Sun Sentinel
Published November 17, 2007
Commissioner Kevin McCarty on Friday denied a request by Allstate
Floridian Insurance Co. to raise customers' rates, saying the company
didn't pass along enough savings to customers when it cut rates earlier in
the year and didn't adequately justify an increase.
Allstate Floridian, the state's fourth-largest property insurer, wanted to
boost prices by a statewide average of 43.4 percent, after cutting them by
14.2 percent earlier this year. That cut wasn't deep enough, based on
changes the Legislature made in January to allow companies easier access
to backup catastrophe coverage from the Florida Hurricane Catastrophe
Fund, McCarty said in a statement.
"It was the intent of Gov. [Charlie] Crist and the Florida
Legislature that the lower-priced reinsurance would enable insurance
companies to pass along significant savings to their policy holders,"
The rejection comes one day after Allstate Floridian officials testified
at a public hearing in Tallahassee. The rejection also affects proposed
rate increases by subsidiary companies Allstate Floridian Indemnity
Co., Encompass Floridian Insurance Co. and Encompass
Floridian Indemnity Co.
Allstate Floridian spokesman Adam Shores said the company's attorneys and
executives are evaluating what the state's decision means.
The company needs the increase, he said. "We need money in the bank
to pay claims, and that's really what this is all about," Shores
said. "… We stand by the [rate increase] filing that we made, we
stand by the justification for it, we stand by the need that is behind
Allstate Floridian has dropped roughly 321,000 customers since it began
shedding policies in 2005. Shores would not say whether the state's
rejection of the proposed rate increase would prompt another round of
customers losing their coverage.
Allstate Floridian's options now are to either petition for an
administrative hearing through the state's Division of Administrative
Hearings or keep the rates they have in place, said Ed Domansky, a
spokesman for the Office of Insurance Regulation.