Castle Key Nonrenewing 33,000 Policies as Florida Mulls Special Session on Condos

Allstate’s Florida subsidiaries are continuing to nonrenew thousands of condominium unit policies over the next several months, delivering another blow for beleaguered condo owners across the state.

The Palm Beach Post reported that Castle Key Indemnity and Castle Key Insurance are notifying policyholders and agents that they are still trimming their books of business in the Sunshine State by 12% overall.

An Allstate spokesperson said Tuesday that the insurer began the process almost a year ago and the second phase of the nonrenewals is now underway. The notices come after the Castle Key companies said in early 2023 that they planned to nonrenew about 33,000 condo policies in the state. The Florida Office of Insurance Regulation earlier this year also approved a 53.5% use-and-file rate increase for Castle Key Indemnity HO-6 condo owners policies. That affected 67,700 policyholders. The carrier blamed spiking reinsurance costs and hurricane losses for that rate increase.

Despite the latest pullback, “Castle Key is committed to protecting our Florida customers and we worked with regulators to protect as many customers as possible over the long haul,” the company said in an email. “Some customers we can no longer cover have the option to easily transition to Monarch insurance.”

Monarch National Insurance Co. was once affiliated with FedNat, a Florida insurer that was deemed insolvent in 2022.

The latest nonrenewal move could be felt as another squeeze on Florida condominium owners, which have seen other carriers non-renew, raise premiums, or require more inspection and safety data in the wake of the 2021 collapse of the Champlain Towers South near Miami Beach. The late-night collapse killed 98 people and led to significant legislative reforms, requiring more frequent inspections and more repair funding to be reserved by condominium associations.

Condominium association fees also have soared as some buildings face extensive upgrade and insurance costs, prompting thousands of owners to put their units up for sale in what has quickly become a crowded market.

At a news conference last week, Gov. Ron DeSantis said he is open to considering a special session of the Legislature, aimed at tweaking the 2022 law that required more inspections and funding reserves for condo associations.

“If the Legislature has ideas about how to make this more sensible for people, I’m totally open to all that,” DeSantis told reporters on Thursday, according to the Tallahassee Democrat and other news outlets.

Legislative leaders were mulling ideas late last week, news outlets reported.

Update: This article has been updated to provide information from Allstate and Castle Key companies.