After Nonrenewals, Castle Key Files 53.5% Increase for Remaining Fla. Condo Policies

Two months after Allstate announced that a Florida subsidiary would non-renew 33,000 condominium policies, the company has filed for a 53.5% average rate increase.

Castle Key Indemnity Co., which as of year-end 2022 held some 287,000 policies in Florida, making it one of the largest property-casualty carriers in the state, this week asked the Florida Office of Insurance Regulation for the rate change on its remaining condo policies.

“This change will be accomplished by revising the non-hurricane and hurricane base rates, as well as the non-hurricane and hurricane coverage A rates,” reads the filing with OIR. “For the base premium and coverage A premium calculation, Castle Key is proposing changes to the non-hurricane and hurricane territorial relativities rating plans.”

The company cited hurricane models for Florida and reinsurance costs in its explanatory memo. The use-and-file increase took effect March 14, but OIR can later review the action and approve or reject it.

Castle Key Indemnity is officially closed to new business, company consultant Jennifer Olson said in the filing. The carrier insures condo units and does not write master condo policies. Policies in force at end of last year included condominium, homeowner and tenant policies, according to OIR’s latest quarterly report, released Friday. Direct written premium was almost $371 million.

The filing is the latest bleak financial news about Allstate’s Florida companies, which were created in 2009, and about Florida’s property insurance market, despite recent efforts by Florida lawmakers to reduce litigation costs for carriers. The AM Best rating firm earlier his month said that it had given the Castle Key Group of companies a “B+ good” financial strength rating, but had lowered the long-term credit rating to “bbb-, with negative implications.”

The lowered credit rating was the result of Castle Key’s “material deterioration in its surplus position as a result of challenging personal property insurance conditions in Florida,” including soaring reinsurance costs, AM Best said in a bulletin.

Castle Key Insurance Co., with about 40,000 policies in Florida, provides the reinsurance for Castle Key Indemnity. An industry analyst said that the rating firm probably wanted to see Allstate shore up the surplus levels at Castle Key Insurance.

It’s also another blow for Florida condo unit owners, many of whom have been hit with non-renewals and premium spikes after the collapse of the Champlain Towers South condominium building in Miami Beach in 2021, which killed 98 residents. Unit owners who have switched to Citizens Property Insurance Corp., the state-created insurer, also face higher premiums and a new statutory requirement to purchase flood insurance.