Allstate Insurance wants another homeowner's insurance rate increase.
Allstate Floridian Insurance Co. has asked for a 22.5 percent average increase, while the smaller Allstate Floridian Indemnity Co. wants a 33.2 percent price hike.At the same time Allstate is trimming policies in Florida, 120,000 of its customers will have to go elsewhere for homeowner's insurance.
George Grawe, Allstate's general counsel, called the increases the only way the carrier can prepare for hurricanes and pay for the rising costs of reinsurance, the coverage insurers buy to protect themselves from huge losses.
"We do not like to take actions that anger our customers, but these rate increases are essential," Grawe said.
Grawe said questions from the Florida Office of Insurance Regulation showed Allstate that it won't need to raise rates quite as much as planned. But he said the difference will be a modest "1 to 3 percent."
That's cold comfort for beleaguered homeowners, who have seen their premiums soar after Florida took a beating from hurricanes in 2004 and 2005.
In the meantime, insurance companies are turning record profits. Allstate Corp. (NYSE: ALL, $61.15) reported Oct. 18 that it had earned a profit of $1.16 billion in the third quarter.
Allstate plans to shave its double-digit rate hike a bit, company officials said Thursday, but Florida's third-largest insurer also aims to drop 120,000 customers.
The company, which dropped 174,000 policies earlier this year, said it was too early to say how many policies would be dropped in any county this time.
Those cuts include 120,000 homeowners policies Allstate said in May it would move to start-up carrier Royal Palm Insurance of Ormond Beach. An additional 54,000 policies covering mobile homes were also dropped in May.
Allstate officials said they don't know where the latest 120,000 policyholders will find insurance.
These people may well end up with Citizens, The Florida funded insurer. Meant as an insurance of last resort, Citizens is now the 2nd biggest property insurer in Florida.
Note= TFM's homeowners insurance is with Citizens.
I can see both sides of the argument. Allstate is making money hand over fist, so it takes some degree of chutzpah to ask for another increase while at the same time trimming policies. It seems to me they are lightening their risk here in Florida.
Insurance companies have always been clever about their finances, and their ways of insuring people. My late father a long time ago said. "You can't beat banks, lawyers or insurance companies." I think he is right.
Now Florida could turn down the rate hike, but then see Allstate either trim those they insure in Florida further, or leave the state entirely. No Insurance company has to sell homeowner's insurance here. Florida could threaten the company over its profitable auto insurance business. But will it do any good for Florida residents?
I'll also point this out which shouldn't need being said. Florida is surrounded by water on three sides. Anyone who voluntarily moved to this state has to know this and the threat hurricanes pose to the state. Like those who build near volcanoes, we've decided to take a risk. Some people would call us dumb to live in an area like this, and the remark would have some justification. Allstate and other insurers are at risk by ensuring people who make dumb choices. They will charge accordingly for our 'foolishness'.
I guess the bottom line is if you want to live in Florida, expect to pay for the risk you're taking.
Rick at SOTP is also commenting on the Allstate news.
Linked to- The World According to Carl, Bright & Early, Bullwinkle Blog,