It has been revealed that Florida regulators are calling in to question increases that are being sought by two property insurers, which, if allowed to proceed, would see rates for some homeowners increase by more than 40%.
Seeking a statewide increase of 32.7%, Castle Key Insurance Co is also seeking a 21.9% rise through its sister company, Castle Key Indemnity Co. Together, the companies provide insurance for over 250,000 homes in Florida.
Documents that have been filed with regulators show that between them the two companies have suffered huge losses amounting to $217 million in the four years between 2007 and 2011, when the housing crisis was at its peak. Speaking about this, the vice-president of the companies, David Border, said: "We've had a net decline over five years and that is highlighted by low storm action with no major events at that time."
Regulators have a number of problems regarding the proposed increases. One is that the companies pay agents a higher fee of 12.6% in commissions for homeowner policies; the average for auto policies is 11.5%. In defense of this, a spokesperson for the company said: "We do know that Florida has a complex property market and agents need to help their policyholders navigate those complexities."
In addition, regulators are concerned that the insurers offered no savings in regards to the sinkhole reforms that were enacted last year by lawmakers.
Regulators are now questioning if rate increases should see a cap placed to stop them going too far.
