LibriumArcana.Games

Allstate customers to get rate hike averaging 28.7% for home insurance

By Kathy Bushouse
Business Writer
Posted June 23 2005


Customers of Allstate Floridian Insurance Co. soon will get a jolt from their home insurance premiums as the company raises rates by an average of 28.7 percent starting in August, even before it gets approval from state regulators.

The company is using a provision under state law that allows insurers to start charging their customers a higher rate, and then submit the filing to state regulators for approval within 30 days.

If regulators reject the rate increase or approve less than the 28.7 percent Allstate Floridian will request, state law requires the company to issue refunds to policyholders.

How much premiums would jump in South Florida wasn't clear Wednesday. Increases can vary by county, and be higher or lower than the average statewide increase.

But if you had a $2,000 annual insurance premium on your house and your rates increased by average of 28.7 percent, that would be an extra $574 each year for coverage.

News of the rate increase emerges a month after Allstate Floridian announced it was not renewing polices for 95,000 of its 758,000 homeowner customers in the state and would stop writing commercial policies.

Allstate Floridian policyholders will have a chance to speak out and ask questions about the rate increase. State law requires a public hearing on a rate increase of 15 percent or more.

A hearing would likely be scheduled in Broward County, where Allstate Floridian has more than 70,000 policyholders, said Valerie Beynon, a spokeswoman for the Office of Insurance Regulation.

A date and time will be announced, she said.

Insurance Commissioner Kevin McCarty said regulators want to get "maximum public input" on Allstate Floridian's rate filing.

He said Allstate Floridian's move to enact a double-digit rate increase before a public hearing "is contrary to the spirit of the statute" mandating public hearings.

Even seeing this "use-and-file" request from a homeowner insurance company is not common because homeowner rate increases tend to be more complicated, McCarty said on Wednesday. This type of approach is used with auto and other types of insurance.

Allstate Floridian, the state's third-largest insurer, will start applying the higher rate on Aug. 15 for all policy renewals. The higher rates will affect the company's homeowner, condo and renter policies, said Allstate spokesman Ryan Priest.

He said the company opted for the use-and-file method because they waited until after the 2005 Legislative session to request higher rates. Insurers had been asked to hold off on rate increases until the end of the session, after new insurance legislation was enacted.

The Legislature's actions likely played a role in Allstate Floridian's rate hike. The company had pushed for changes to the Florida Hurricane Catastrophe Fund, which provides reinsurance coverage to the state's insurers. Reinsurance is insurance for insurance companies, so they can pay claims after a hurricane or other catastrophe.

Allstate Floridian wanted a change that meant companies would have to take only one multibillion-dollar hit from a hurricane before being able to take out money from the catastrophe fund to pay claims. That didn't happen.

"Quite frankly, I think they're disappointed in the results of the [legislative] session," McCarty said.

Priest acknowledged the 2005 session had an effect on the company's rates. "We have to basically take a look at the outcome of the session and apply that to how we can continue to serve our customers at the fullest capacity," he said.