Allstate Agrees to Reduced Rate Hike, Policy Drops in Mississippi

Mississippi Insurance Commissioner Mike Chaney has agreed to let Allstate Property and Casualty Co. increase homeowner insurance rates 19.4 percent in the state.

Chaney said that Allstate was threatening to drop 18,000 policyholders unless he allowed a rate hike of at least 44 percent. Allstate said its results actually show a need for a hike as high as 75 percent.

Chaney said he “worked diligently” to negotiate the requested rate down to a 19.4 percent increase.

He also got Allstate to agree to non-renew no more than 5,000 policies.

Company spokeswoman Allison Hatcher said no date has been finalized for the increase, though it’s expected to go up in June for new business and renewals.

Policyholders who switch their auto policies to Allstate could avoid some of the increase. As part of the deal, Allstate has agreed to offer a 25 percent discount on new multi-line policies. Allstate will also permit mono-line policyholders anywhere in the state convert to multi-line policies for the next year.

Chaney and Allstate have been battling over rates since the fall of 2009, when the company initially filed for a rate increase of 65 percent. Chaney rejected that increase, along with a 44 percent statewide rate hike the company requested in March 2009.

Allstate has said it needs the increase because its losses are rising and it has not had an increase in the state for three years. It also says that not only its own analysis, but also an actuarial report within the insurance department, shows that much a higher increase is warranted.

Chaney has said that the department has several actuarial reports, not just one, and that he has to look at more than the numbers when making a decision.

Previous Insurance Commissioner George Dale approved a 29.5 percent statewide rate hike for Allstate in 2006, which included an increase of 90 percent in the three coastal counties. In 2008, Chaney approved a 14 percent statewide average increase, with some coastal rates jumping as much as 40 percent.

In late 2009, Chaney said he would no longer consider rate increases from major insurance carriers that were broken down by zone, but only those proposed statewide.

In the latest negotiations, Chaney said, Allstate was threatening to drop 18,000 policyholders unless he allowed a rate hike of at least 44 percent. Through negotiations, Chaney said Allstate agreed to the lower increase and drop fewer policies — 5,000, with no more than 150 of the total dropped in coastal counties.

Hatcher said Allstate will not drop any homeowner customers who also move their auto policies to Allstate. Customers who do this will qualify for a 25 percent discount on their homeowner premium. The previous discount, she said, was 15 percent.

“This has been a painstaking process,” Chaney said, “and as commissioner, I worked diligently to negotiate the requested rate down to a 19.4 percent increase to the policyholder. I earnestly believe I have arrived at the most equitable solution possible, while carefully balancing the percentage of increase granted with the number of non-renewals by Allstate throughout the state.”

The Associated Press contributed to this report.

Topics Pricing Trends Mississippi