Allstate’s Castle Key plans to drop 33,000 condo policies in Florida

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At least one of Allstate Insurance Group’s Florida subsidiaries plans to not renew 33,000 Florida condominium policies as of June.

In a notice sent to Florida agents this month, Allstate said its Castle Key subsidiary sent a letter Jan. 11 to the Florida Department of Insurance to drop the coverage. The letter was marked “trade secret,” so details of the policies were not released by OIR.

Allstate, which changed the name of its Florida affiliates in 2009, did not say whether Castle Key Insurance Co., Castle Key Indemnity Co. or both are included in the action.

“The industry as a whole is experiencing significant cost pressures,” due to more frequent storms and higher repair costs, said the bulletin from Karen Latona, Allstate’s director of sales for the Central East region, and Shannon Bauer, regional sales manager for the Southeast .

OIR still may not approve the withdrawal, but Allstate’s memo to agents sounded confident regulators would allow it. The carrier said it will give customers the required 120-day notice before non-renewal dates. Agents can continue to write apartments through Citizens Property Insurance Corp., the memo added.

The move adds pressure on Florida condominium owners, who have seen other carriers not renew, raise premiums or require more inspection and safety data since the 2021 collapse of Champlain Towers South near Miami Beach. The late-night collapse killed 98 people and led to significant legislative reforms requiring more frequent inspections and more repair funds to be retained by condominium associations.

Castle Key, which can only be written by Allstate agents, doesn’t write basic condo policies, so condo associations aren’t affected, but personal homeowner policies will be, explained Travis Moore, a consultant who represents the interests of the condominium.

Homeowners may soon receive higher premiums. By switching to Citizens, apartments will now face the additional cost of flood insurance. Senate Bill 2A, passed in a special session of the Florida Legislature in December, now requires all civil policyholders to also obtain flood insurance regardless of elevation.

As of the third quarter of 2022, Castle Key Insurance and Castle Key Indemnity reported a total of 322,504 policies in force in Florida and $462 million in total written premium, according to Florida Office of Insurance Regulation. Castle Key Indemnity was ranked as the seventh largest insurance carrier in Florida for the third quarter of last year, according to OIR data reviewed by the South Florida Sun Sentinel news outlet.

Allstate’s media relations team did not provide additional information about the non-renewals as of Sunday. The news may not be surprising since last fall Allstate Corp. said it suffered a net loss of $694 million for Q3. All of this has raised industry concerns that 2023 could see more non-renewals from Allstate or other carriers.

The news marks at least the seventh major carrier not to renew policies in Florida’s troubled insurance market since the end of 2021. That includes six insurers that have filed for bankruptcy and one that is in an organized runoff. Last June, Allstate announced it had stopped generating new condominium business in Florida, former Florida Deputy Insurance Commissioner Lisa Miller said.

Senate Bill 2A and previous reforms are expected to stabilize the market, reduce litigation costs and help prevent further withdrawal from the Florida market. But officials said it could be another year or two before the full effect is felt.

Just prior to the non-renewal announcement, Castle Key Indemnity Insurance also filed for a 14.9% rate increase for its condominium program.


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