Allstate Writing New Business in Florida, Weighs Citizens Policies

April 29, 2010

The Florida companies of Allstate Insurance Co. have been writing new homeowners and renters business for several months and have now indicated they may also assume some policies from the state-backed insurer, Citizens Insurance Corp.

Amy Moore, Allstate media representative for Florida, confirmed that Castle Key subsidiaries plan to write about 50,000 new multi-line policies between now and next year but said a decision on how much business to take from Citizens would not be made until January 2011.

In Florida, Allstate operates as Castle Key Insurance Co. ($156 million and surplus and 157,000 policies) and Castle Key Indemnity Co. ($14.1 million in surplus and 76,536 policies).

Allstate changed the names of its Florida subsidiaries to Castle Key in July 2009. The insurer said the name changes were made in order to “better reflect the fact that these property companies are separately capitalized from Allstate Insurance Co.” The company has about 1,000 exclusive agents in the state.

The interest in new Florida business is a switch for Allstate. In 2005, Allstate began scaling back in Florida and dropped about 95,000 policies.

The Florida Office of Insurance Regulation (OIR) issued a statement hailing the decision by Allstate to expand in Florida and potentially augment its writings with policies from Citizens, the state-run insurer for high-risk counties. Any transfer of policies from Citizens to the private sector is subject to the approval of the OIR.

“This action reflects a new commitment by a large insurer to be engaged in Florida’s private property insurance market,” said Insurance Commissioner Kevin McCarty. “Castle Key is actively demonstrating leadership and confidence in the current economic and regulatory environment.”

According to McCarty, Castle Key cited a number of reasons for considering Citizens’ policies including: four consecutive years without significant storm activity; the insurance company’s capacity to write additional policies; and a need to balance capital with exposure.

McCarty’s praise for Allstate is a far cry from what he was saying a few years ago when he trying to get Allstate to supply information regarding its reinsurance program and relationships with risk modeling companies, insurance rating organizations and insurance trade associations. McCarty concluded that Allstate was not cooperating, citing its “blatant disregard” for subpoenas he had issued, and suspended Allstate’s license to write new business in 2008.

The parties reached a settlement in August 2008. As part of that settlement, Allstate paid a $5 million fine, lowered its rates and agreed to write 100,000 new policies over the next three years.

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