Thursday, December 14, 2006

Allstate Insurance Asking for Rate Increase

Under pressure from state regulators, Allstate’s two Florida homeowners insurance companies are drastically shrinking the size of the rate increase they’re seeking.

Allstate spokesman Ryan Priest said the companies amended filings with the state Office of Insurance Regulation late Monday as part of “ongoing discussions with the office.”Allstate Floridian Insurance was seeking a rate increase that would have been about 19 percent on average statewide. The company now says it could get by with an average increase of about 8 percent statewide.

Allstate Floridian Indemnity is now asking for an increase of 8.8 percent on average statewide, down from the 26.4 percent increase it had been seeking.Company officials have said that the increase is needed to cover the companies’ rising cost of reinsurance, backup insurance that covers the company in case of a large loss. Allstate’s reinsurance costs have gone up more than 200 percent since the back-to-back hard hurricane hits of 2004 and 2005.

Office of Insurance Regulation officials clearly were skeptical of Allstate’s filing at a hearing last month.Priest said the new proposed increase reflected the companies’ “immediate need” in terms of reinsurance.

“We have an obligation to our customers to make sure that our company remains viable in this marketplace,” Priest said.The two companies have about 400,000 policies in Florida.

Several insurance companies have sought large homeowners insurance rate increases. State lawmakers plan to meet in a special session in mid-January to try to deal with the issue. Courtesy Planet Realtor 12/13/06.