Allstate Wants a Rate Increase in Louisiana

Allstate Corp. is asking to raise rates for 144,000 Louisiana homeowners who get their insurance coverage from two Allstate companies.

According to the state insurance department, Northbrook, Ill.-based Allstate wants an average 11.3 percent increase for 71,000 homeowners covered by Allstate Insurance Co. The company is proposing an average 5.9 percent hike for 73,000 homeowners covered by Allstate Indemnity Co. Together, the requests total just under $17 million in higher rates.

If Louisiana Insurance Commissioner Jim Donelon agrees, higher rates would go into effect with new and renewed policies on March 1.

Allstate is the state’s second-largest insurer of homes.

The state’s largest insurer of homes — State Farm Fire & Casualty Co. — received an average 7.8 percent rate increase affecting 301,000 policyholders on Dec. 7.

Allstate spokeswoman Allison Hatcher said the rate hike is needed to cover Allstate’s cost of reinsurance — in essence, the coverage Allstate itself takes from other companies to help cover damages from catastrophic events, such as hurricanes. The reinsurance charge is built into a homeowner’s policy rate and typically is higher for coastal areas, she said.

Hatcher could not provide a breakdown of how high rates might go in various parts of Louisiana, but they “could vary across the state” because of reinsurance costs.

Allstate last received a homeowners’ rate increase in August 2010 when Donelon approved rate increases ranging from 2.9 percent up to 11.6 percent, depending upon which of five Allstate umbrella companies writes the coverage. Allstate Insurance received the 11.6 percent hike, while Allstate Indemnity received a 3.3 percent increase.

Allstate also writes coverage for about 6,000 Louisiana homeowners through Encompass Indemnity Co., Encompass Property and Casualty Co., and Encompass Insurance Co. of America. Those companies are not covered by the new filing, Hatcher said.

Insurance department spokeswoman Lori Cherry said on Jan. 23 that Donelon had 45 days to decide on the request — although that deadline is restarted if regulators request more information from Allstate.