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Allstate wants a hefty increase

The insurer requests hikes of up to 42% in insurance premiums.

By HELEN HUNTLEY and JENNIFER LIBERTO, Times Staff Writers
Published September 29, 2007

Homeowners insured by Allstate face a huge increase in their premiums if state regulators approve the rate request the company filed Friday.

Allstate said it wants to raise rates 42 percent for the 283,685 customers of its Allstate Floridian Insurance Co. and 28 percent for the 84,144 customers of Allstate Floridian Indemnity Co.

"The bottom line is that we've made a promise to our customers to be there to pay their claims and we have to have the capital in place to do so," Allstate spokesman Adam Shores said.

The state's insurance companies have until Monday to spell out the rates they want to charge in the wake of legislation that was designed to save companies and policyholders money. Companies now can buy more of their reinsurance, a backup coverage, from the state.

State regulators, who had predicted the legislation would lead to rate cuts, have vowed to fight some of the requests for rate increases that have poured into their office in recent months.

Among the state's largest insurers, only Nationwide has filed a rate request that includes significant savings, a net reduction of 22 percent. USAA, Florida Farm Bureau and Hartford Insurance Co. of the Midwest are among those asking for increases. United Property & Casualty and Florida Family are among those filing for decreases.

However, more than half the companies still have not filed. The state's largest private insurer, State Farm, is expected to file Monday.

In March, Allstate said the new state law would allow it to cut rates 14.2 percent for Allstate Floridian Insurance and 13.2 percent for Allstate Floridian Indemnity. Spokesman Shores said that opinion changed with the development of more sophisticated computer models that show the company had more risk and needed to buy more reinsurance than they previously assumed.

He said rating agencies require the company to be capitalized "to be able to withstand two one-in-100-year events in the same season."

The governor's office disagreed.

"Not since Noah's ark has there been a catastrophic event at the level that Allstate claims it needs to be prepared for," said Chris Kise, chief legal adviser for Gov. Crist.

The Office of Insurance Regulation said it will review the filings to be sure the savings from the change in the law are adequately applied and passed on to consumers. "A 42 percent increase in rates does not appear to be in line with that objective," spokesman Jonathan Kees said.

Helen Huntley can be reached at hhuntley@sptimes.com or (727) 893-8230.

[Last modified September 28, 2007, 22:39:36]