RISMEDIA, Jan. 8, 2007-(MCT)-Allstate Floridian Insurance Co. will jettison as many as 106,000 home and condominium customers statewide, the company said Thursday.
The action comes a month after the state trimmed the price increase the insurance company requested.
Those policy holders will be offered coverage through Royal Palm Insurance Co., though customers shouldn't expect to pay the rates they paid to Allstate Floridian. The policy-holder cuts will start in the spring, beginning with customers whose policies renew in mid-April, company spokesman Ryan Priest said.
This is the latest in a series of policy reductions that Allstate Floridian has announced since 2005, and the second such deal with upstart Royal Palm Insurance.
In May 2006, Allstate Floridian said that 120,000 customers would be dropped and offered new policies through Royal Palm Insurance. In May 2005, Allstate said it wouldn't renew 95,000 customers, who would instead be offered policies with Universal Insurance Co. of North America.
Allstate Floridian is the state's third-largest home insurer. Once the latest round of cuts is complete, Allstate Floridian will insure about 300,000 homes and condos, Priest said.
The homes and condos that will be dropped will be chosen at random, but consideration will be given to the age of the home, how it was built and where it is located, Priest said.
The move has nothing to do with the state last month sharply reducing the price increase Allstate Floridian requested, Priest said.
State Insurance Commissioner Kevin McCarty announced last month that Allstate Floridian would be allowed to raise prices by a statewide average of 8.2%, far less than the 22.5 % average increase originally sought and the 33.2%average increase sought by its subsidiary, Allstate Floridian Indemnity Co.
When asked whether Allstate Floridian planned additional policy-holder cuts, Priest said:
"We will continue to look into all options that would improve the overall financial stability of Allstate Floridian. It's hard to look into a crystal ball. It just really depends on the overall health of the 1/8insurance3/8 market and how that continues to change."
The Office of Insurance Regulation was officially informed Thursday of Allstate Floridian's decision, though regulators knew Allstate Floridian had planned to drop more customers, said Bob Lotane, a department spokesman. Company officials said in November at a public hearing that they were weighing a move to drop as many as 120,000 policies.
"The good news is, they have found a company that's willing to provide coverage for the affected policy holders so they won't be without coverage," Lotane said. "… However, we would certainly prefer it if Allstate were to continue writing the same amount of coverage and Royal Palm put their capital toward insuring another 120,000 people."
Former Allstate Floridian customers say the policy offers they're getting from companies like Royal Palm and Universal Insurance Co. of North America are far more expensive than the premiums they paid to Allstate Floridian.
Stephen Blum of Delray Beach said he paid $686 for coverage on his condo. Universal Insurance Co. of North America offered him a similar policy for more than $1,800, nearly three times what he paid with Allstate Floridian.
Blum said he's planning to look for a new insurance company. Meantime, he hopes the Legislature will do something to address policy reductions when it is scheduled to meet Jan. 16 for a special session on property insurance.
He blames state leaders for Allstate Floridian's actions.
"I'm disappointed in our Legislature that allows this to happen, whether it's the strong lobbyists or whatever the story is," Blum said.
Unless action is taken soon, "there's going to be an uprising in the state of Florida," Blum said. "More and more people are moving to North Carolina or wherever and saying they're not going to put up with it."
Copyright © 2007, South Florida Sun-Sentinel.
Distributed by McClatchy-Tribune Information Services.
