Nov 16, 2007 6:21 pm US/Eastern
Regulators Deny Allstate Rate Increase
TALLAHASSEE (CBS4) ―
Proposed home insurance rate increases by four Allstate insurance companies that could have more than doubled what some Floridians pay for wind coverage were rejected Friday by state regulators.
The state's insurance commissioner said the company's rate increase proposals, ranging from average increases of just under 30 percent to more than 43 percent, didn't comply with a new state law that provided cheaper backup coverage for insurers and required them to pass on savings.
"The rates proposed by the Allstate companies do not pass along all the savings reasonably available," Florida Insurance Commissioner Kevin McCarty said.
Allstate executives told regulators this week that while legislative changes helped make reinsurance less expensive, it didn't cut the company's costs enough to put it in a position to
cover all the claims it might need to pay in a worst-case scenario.
The company has said that it's prime concern is having rates high enough to have enough money on hand to pay all the claims it might have.
Company officials didn't respond to a request for comment Friday after the decision.
Allstate Floridian Insurance Co. was seeking an increase that would have averaged 43.4 percent. Another Allstate company, Encompass Floridian Indemnity, was also seeking rate increases of
more than 40 percent on average.
Allstate Corp., the second-largest U.S. property and casualty insurer and the parent of the four Florida companies, is still recovering from 2004 and 2005, when it faced massive hurricane
claims.
The Florida companies had to be bailed out by their Northbrook, Ill.-based parent after their 2004 losses of more than $700 million, company officials told regulators this week.
Allstate is one of several companies that had requested a rate increase despite the law passed in January that was meant to drive home insurance rates down.
Gov. Charlie Crist has urged regulators to be tough on companies, and reject rate increase proposals if they can't be justified.
Allstate could appeal the decision.
The company also must face two more days of hearings in January to answer questions on how it sets its rates in response to subpoenas issued by the state.
Allstate has been shedding policies in Florida and shifting them to other insurers. The companies had about 750,000 policyholders in Florida five years ago and are now down around 400,000.
(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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