Florida insurance regulators are facing down a new rate proposal from property insurers Castle Key Insurance Company and Castle Key Indemnity Company. Representatives of the companies appeared before regulators on Tuesday to testify on the necessity of their proposals. Florida has recently been inundated with proposals to increase insurance rates due to the fact that hurricane season is sending several tropical storms toward the state. Given toll that natural disasters have taken on the industry earlier in the year, insurers are keen to recover their losses by hiking up premiums.
The two companies are asking approval to increase rates by an average of 31% to 36%. The proposal is steep and has led many regulators to decry the proposal as excessive. Speaking under oath, Bonnie Gill, and executive with Castle Key, said that individual customers may be liable for as much as a 68% increase in their premiums. Gill says that the higher rates are necessary because the companies have continued to struggle with underwriting losses in the state despite there being no major disasters since 2006.
Despite the increases, executives say that the money coming in from the new rates will still not be enough to cover the risk of doing business in Florida. This level of risk has driven a number of insurance companies away from the state before, but Castle Key has remained, claiming that the challenges inherent in this particular market lead to a better payoff.
Regulators will be closely reviewing the proposals to determine whether or not they are justifiable. The review process is expected to take two weeks.