Florida home insurers lining up for rate hikes

Posted by on Aug 5, 2012 | 0 comments

By Julie Patel, Sun Sentinel

4:09 a.m. EDT, July 25, 2012

Although Florida has dodged a direct hit from a hurricane for almost seven years, three major home insurers want to raise rates.

Allstate’s Castle Key Insurance and Castle Key Indemnity want 32.7 percent and 21.9 percent statewide average increases; Universal Insurance Co. of North America wants a 22 percent average increase and State Farm Florida wants a 14.9 percent average increase.

The Office of Insurance Regulation will hold a hearing Wednesday to question State Farm about its proposed 58 percent increase for policyholders who rent their homes instead of live in them. It has also scheduled hearings for Castle Key and Universal in the next two weeks.

Meanwhile, state-backed Citizens Property Insurance‘s board plans to vote Friday in Miami on proposed increases of up to 10 percent for existing policyholders and possibly more for new policyholders.
Dozens of Florida home insurers raised rates last year.

Combined, the Castle Key companies are Florida’s fourth-largest home insurers after Citizens, Universal Property & Casualty Insurance — which is not related to Universal Insurance Co. of North America — and State Farm. Castle Key Insurance has 124,382 home insurance policies statewide, including 27,361 in Broward, Palm Beach and Miami-Dade counties. Castle Key Indemnity has 128,377 policies, including 12,558 in South Florida.

Castle Key Insurance’s increase includes a 44.9 percent increase for condominium unit owners, 8.8 percent for renters and 25.9 percent for basic and broad homeowners coverage. In its rate proposal, it says it needs the increase because of the hurricane risk in Florida, the cost of capital and the cost of reinsurance, among other things.

Castle Key Indemnity’s increase includes an 18.4 percent increase for homeowner policies, 23.9 percent for special, broad homeowners policies and 21.2 percent for renters. In its rate request, it says it needed a 63 percent increase last year but planned to implement the increase in two years as “an appropriate transition period.”

Castle Key spokeswoman Cathy Mayo said the company has paid out more in claims and other costs than it has collected the past few years, which has “eroded” its cash-paying funds. “The rates filed reflect Castle Key’s desire to preserve its financial ability to serve Florida customers over the long term, and stabilize and rebuild the company’s reserves,” she said.

“In Florida, it’s not a question of ‘if’ a large storm will strike our shores, it’s only a question of when,'” she added.

Universal Insurance Co. of North America wants a 22 percent statewide average increase, including a 24.5 percent increase for homeowner policies and no change for renters and condo unit owners.

Universal, based in Sarasota, is among the top 20 home insurers in Florida with 75,225 home insurance policies, including 10,566 in South Florida.

Kristen Watson, a spokeswoman for the company, said the proposed increase relects the costs of doing business in the state. “Universal North America is committed to providing long-term, stable coverage and programs to policyholders in Florida. Sometimes, this commitment requires us to make hard decisions,” she said.

State Farm Florida breaks down its proposed 14.9 percent increase in three groups: 48.8 percent for renters, 27.3 percent for condominium unit owners and 14.2 percent for homeowners policies, including the 58 percent increase for landlords. The increases are due to changes the insurer wants to make on home insurance discounts and deductibles.

Farm spokeswoman Michal Connolly said the proposal includes increasing or reinstating some discounts.

The insurer has 466,797 home insurance policies, including 66,960 in Broward, Palm Beach and Miami-Dade counties.

Robin Westcott, the state’s insurance consumer advocate, said the proposed 58 percent increase includes a 16 percent “profit and contingency factor,” to account for unexpected costs: “This profit factor is excessive and unjustified, particularly for a company that is unwilling to write any new business and has non-renewed approximately 125,000 policies in our state over the last two and a half years.”

“Factoring in a risk contingency when determining rates is an appropriate and widely accepted industry standard,” Connolly said.

The State Farm hearing is at 9 a.m. Wednesday and can be viewed live online on the Florida Channel, thefloridachannel.org. The Citizens meeting is Friday at 9 a.m. at the Marriott Hotel, 11099 Brickell Ave., Miami.

The rate hearing for Universal is Aug. 2 and the Castle Key hearing is Aug. 7.

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