Allstate and its Florida subsidiaries must use $84 million collected from state homeowners to buy reinsurance, according to an agreement signed with Florida Commissioner Kevin McCarty.
Mr. McCarty said the Office of Insurance Regulation originally disapproved the profit factor in the company's application for a rate increase. But that increase was then approved with the proviso that the company buys more reinsurance.
"If they don't use all of the funds for reinsurance, the money will be refunded to consumers," he said.
The commissioner said he wanted to clear up any misinformation that arose after the Office disapproved the filing.
"After Wilma hit Florida in late October, the Office and the companies took another look at the future and the possibility of another active hurricane season," Mr. McCarty said.
Allstate incurred a more than $3 billion loss in the third quarter last year and since that time has announced plans for a major national reinsurance purchase.
The Northbrook, Ill.-based company initiated a major public relations drive to develop a state-federal backstop to cover so-called mega-catastrophe loss. Mr. McCarty said he would introduce such a program at the spring National Association of Insurance Commissioners meeting next month.
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