UPDATE: Allstate to Reduce Fla. Homeowner Rates

Florida officials announced today that Allstate would reduce all homeowner rates in the Sunshine State by 5.6 percent as part of broad settlement. The move will end the state's battles with the insurer.

The office of Florida Insurance Commissioner Kevin McCarty noted that the insurer would pay a $5 million fine as part of the arrangement. The $5 million fine will be paid within 30 days of the agreement by the Allstate corporate office in Northbrook, Ill., not by the Florida companies. The fine will be paid to the Insurance Regulatory Trust Fund.

Allstate must lower the rates within 30 days of this agreement, for a total reduction of 19.8 percent when including the 14.2 percent reduction that took effect June 1, 2007. Allstate also must write 100,000 new homeowners insurance policies over the next three years; and Allstate’s corporate office must cancel a $175 million surplus note it issued to the Florida Allstate companies.

“It is unfortunate that Allstate’s disregard of Florida law required the Office to take the drastic actions that we did in order to bring Allstate into compliance,” said McCarty. “However, the terms agreed to by Allstate in the consent order go a long way toward restoring confidence in Allstate’s business practices and will provide a great benefit to their policyholders and future policyholders.”

Allstate had been contesting efforts by Florida officials to require insurers to drop rates that skyrocketed following the hurricane seasons of 2004 and 2005.