It’s likely that Allstate Floridian, and its affiliated Allstate companies in Florida, will appeal insurance regulators’ rejection of its rate hike. Allstate insists that without the hike - 40-plus percent on average for Allstate Floridian policyholders - the companies could run out of money if they faced claims from another major hurricane.
But even if an administrative law judge would agree with ‘’The good hands people” that an increase was warranted, state Insurance Commissioner Kevin McCarty has veto power.
Allstate would then have to take the matter to the state courts. In other words, the whole process, could take months, if not longer.
The more intriguing question is what Allstate decides to do in the meantime. Will it decide to shrink its homeowner insurance business in Florida beyond previously announced reductions?
Just three years ago, Allstate’s Florida homeowner companies had around 700,000 policyholders. By April 2008, the number will be around 200,000.
Allstate spokesman Adam Shores says nothing is ‘’off the table,” including new reductions.
But don’t count on Allstate dropping altogether what it maintains is its money-losing line of business. The company needs to keep some homeowner policies on the books if only to stay in the auto insurance game.
Allstate is the second biggest car insurer in Florida and profits from that line play a major factor in the national profitability of the company. Changes in insurance law during a legislative special session in January require that property and casualty companies that offer both auto and homeowner insurance in other states offer both lines in Florida.
That doesn’t mean that Allstate has to lift its freeze on new property policies under the interruption of the policy so far by regulators.
But they do at least have to maintain a small presence.
We may soon find out just how small that could be.
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