Allstate Raises Louisiana Homeowners Insurance Rates
With the industry-wide trend of rising reinsurance costs, one of the biggest insurance providers in the state of Louisiana announced recently that it will raise their homeowners insurance rates.
Allstate Corporation announced that Louisiana homeowners policy holders who are being covered by two of their companies, the Allstate Indemnity Co. and Allstate Insurance Co., will experience an increase on their premiums.
Around 73,000 homeowners policyholders of Allstate Indemnity Co. will have an average increase of 5.4 percent. On the other hand, about 71,000 policyholders from Allstate Insurance Co., will have an increase of 11.3 percent. Said homeowners insurance rate increase will take effect on March 1 next year.
An Allstate spokesperson for the southern region, Allison Hatcher, said that the higher premiums are necessary as to respond to the rising cost of reinsurance. According to her, the decision is necessary as for Allstate to remain “strong and positioned to deliver on its promise.”
Reinsurance is a means that insurance companies take to protect them from possible excessive claims. Allstate reinsured their policies through a sister company. Reinsurance takes a larger part on the premiums for policies written on coastal areas where risk for hurricane damage is high.
According to Louisiana Insurance Commissioner Jim Donelon, Allstate rate increase shall be the same regardless of the area percentagewise for the change is due to higher reinsurance charges. Donelon said that if the rate increase is due to reinsurance, insurance companies just need to show to the Insurance Department records that shows the cost that it will pass on to the consumers.
Allstate is being considered as the second-largest insurance provider in the state of Louisiana, next to State Farm.
The Guy Carpenter U.S. Property Catastrophe Rate on Line Index showed that property and casualty reinsurance rates have increased an average of 7 percent this year.