By News Service of Florida
July 20, 2011
Argues for 46% increase, not the sought-after 31%
TALLAHASSEE -- Citing higher reinsurance costs and a new loss model, representatives of Castle Key Insurance Co. told regulators Tuesday that a requested statewide premium increase of at least 31 percent is not adequate and the company will return next year for another round of requests.
In a unique development, the statewide advocate charged with looking out for consumer interests agreed, saying in one situation that the company formerly known as Allstate Floridian should be charging more on more than half the 270,000 policies it covers across the state.
Saying the company is trying to cushion the blow to policyholders, company representatives told the Office of Insurance Regulation that rates remain actuarially inadequate but will still result in premium increases to some customers of more than 68 percent.
Among the added expenses is $143 million for nearly $900 million in reinsurance coverage.
Formerly Allstate Floridian, Castle Key is asking for average increases of 31.2 percent with individual policies rising from 7.3 percent to 68.3 percent. Its subsidiary Castle Key Indemnity, which has taken on more recent policies, is requesting an average increase of 35 percent, with individual policies rising between 16 percent and 61.3 percent.
Castle Key and Castle Key Indemnity are the sixth, and seventh largest-largest property insurers in the state. Combined, the companies cover about 5 percent of the market.
During the hearing, OIR consumer advocate Steve Alexander called for a lower rate hike average about 23 percent for Castle Key, but said Castle Key Indemnity was not asking enough. Alexander said his calculation showed the company should be asking, at minimum, for a 46 percent increase.
The experience on the indemnity company has been very poor, probably because the company has written a lot of new business, Alexander said following the hearing. What they are asking for the indemnity company is reasonable, he said.
Alexander's support took a few board members by surprise.
"I think that is the first time Ive heard that," said Belinda Miller, OIR deputy commissioner, referring to Alexander's testimony. The OIR panel did not rule Tuesday, following a series of questions and requests for additional information.
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