NU Online News Service, July 13, 3:00 p.m.EDT

Two Allstate subsidiaries in Florida are asking regulators toapprove 33 percent and 18 percent average statewide rate increasesfor homeowners insurance based on the fact that loss expenses areexceeding premiums, Allstate said.

Castle Key Insurance is asking for the larger increase. CastleKey Indemnity, the subsidiary writing new business in Florida, islooking for the lesser rate hike.

Allstate spokeswoman Amy Moore said the companies need theincreases to offset rising costs of reinsurance and claims expensesfor fires, thefts and storms.

Castle Key has not received a rate increase in about five years,Ms. Moore added. She could not speculate on the consequences of notgetting the rate increases.

A hearing with the state's Office of Insurance Regulation (OIR)is set for July 27.

The increases would amount to a $412 per year average increaseon Castle Key policies and $243 per year on Castle Key Indemnitypolicies.

A year ago Allstate renamed Allstate Floridian Insurance Co.and Allstate Floridian Indemnity to Castle Key and Castle KeyIndemnity to clarify the companies are separately capitalized fromAllstate Insurance Co.

Days later A.M Best Co. downgraded the Florida insurance groupto B- (Fair) from B+ (Very Good) and attached a negative outlookdue to the companies' unprofitable experience and hurricaneexposure.

In August 2008 Allstate and Florida regulators reached anagreement to end a long spat over the OIR's requestfor documents from the company which at one point led to theinsurer's suspension.

Allstate Corp. agreed to pay a $5 million fine to resolve legalissues stemming from the argument. The insurer also agreed to lowerhomeowners insurance rates by 5.6 percent and it was to write100,000 new policies in Florida by November 2011.

Ms. Moore said Castle Key Indemnity is "more than halfway" tothat goal of 100,000 new policies. The insurer is now writing newpolicies on homes one mile and farther from the coastline–changedfrom a previous distance of five miles–so long as homes meet CastleKey's other underwriting guidelines.

Castle Key Indemnity is also considering taking policies fromthe state's residual market, Citizens Property Insurance Co., Ms.Moore said.

Castle Key is the sixth-largest homeowners insurer in Florida.Castle Key Indemnity is 22^nd, based on 2008 data fromthe OIR.