Florida Regulators Deny Allstate Rate Increases

November 19, 2007

The Florida Office of Insurance Regulation issued Notices of Intent to disapprove five rate filings submitted by Allstate Floridian Insurance Co., Allstate Floridian Indemnity Co., Encompass Floridian Insurance Co., and Encompass Floridian Indemnity Co.

The Allstate companies were seeking double-digit state-wide, overall average rate increases for homeowners insurance:
* Allstate Floridian Insurance Co.: 43.4 percent
* Allstate Floridian Indemnity Co.: 27.4 percent
* Encompass Floridian Insurance Co.: 39.7 percent
* Encompass Floridian Insurance Co.: 36.5 percent (Dwelling Fire)
* Encompass Floridian Indemnity Co.: 41.6 percent

Some Allstate policyholders could have seen increases of as much as 150 percent. On the other end, some of the requested increases were as low as 6 percent.

“Our action is based on a thorough review of the information previously provided by the companies and their testimony at the hearing,” said Insurance Commissioner Kevin McCarty. “The rates proposed by the Allstate companies do not pass along all the savings reasonably available as a result of the expansion of the Florida Hurricane Catastrophe Fund.”

Special legislation, adopted in January, made lower-priced reinsurance available to insurers.

“It was the intent of Gov. Crist and the Florida Legislature that the
lower-priced reinsurance would enable insurance companies to pass along significant savings to their policyholders,” McCarty added.

Reinsurance is the insurance that companies buy to cover large losses.

Allstate now may petition the OIR for an administrative hearing through the Division of Administrative Hearings. In the meantime, homeowners’ insurance rates previously submitted by the Allstate companies will remain in effect until the process is concluded:
* Allstate Floridian Insurance Co.: -14.2 percent
* Allstate Floridian Indemnity Co.: -13.2 percent
* Encompass Floridian Insurance Co.: -13.0 percent
* Encompass Floridian Insurance Co.: -12.3 percent (Dwelling Fire)
* Encompass Floridian Indemnity Company: -11.2 percent

The decision to deny the rate increases followed a public hearing on Nov. 15 in which the OIR questioned various aspects of the rate filings.

The Commissioner has the authority to hold a public hearing to question a company about its filing pursuant to Florida law. Florida law requires the OIR to hold a public hearing for rate increase filings exceeding a statewide average of 15 percent.

Source: Florida Office of Insurance Regulation

Topics Legislation Trends Florida Homeowners Pricing Trends

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