It may have happened before but, I wasn’t in the room. During a televised OIR rate hearing this week, a major Florida homeowners carrier was criticized for, get ready…requesting too little of an increase! Yep, it’s true. And guess who was doing the criticizing? Florida’s Insurance Consumer Advocate.
In this case one of Allstate’s Castle Key Pup’s, was requesting a huge 31% statewide average increase, instead of what it really wanted which was closer to 68%. To the carriers credit, it reasoned the reduction was necessary to avoid considerable sticker shock so it cut down about half of the request even though its rates would still be actuarially inadequate.
Castle Key and Castle Key Indemnity are the sixth, and seventh largest writers of homeowners coverage in the state. Together they make up about 5 percent of the market and insure 270,000 homeowners statewide. They’ve been hit hard by the latest RMS Hurricane model which upped predictions for those living inland where Castle Key has a substantial book.
The bill for $900 million in reinsurance coverage is an additional $143 million.
In his presentation at the end of the hearing, the actuary for the office of the Insurance Consumer Advocate (ICA), Steve Alexander called for a lower rate hike of about 23 percent for Castle Key, but said Castle Key Indemnity needed much more than it was asking; a total of nearly 46%.
The room was taken back, including OIR panelist, Belinda Miller who said. “I think that is the first time I’ve heard that.”
What would make this bizarre routine even more bizarre would be if the OIR denies the request because it’s too low or directs the carrier to implement a rate higher than what it requested.