SACRAMENTO,
CA — A California Superior Court judge denied an Allstate petition to
halt a state order to slice its automobile insurance rates by 15.9%, or
approximately $124 per vehicle per year.
Judge Peter Busch ordered the company to comply with the March order
from Insurance Commissioner Steve Poizner, which takes effect April 28.
Allstate sought to stay the order pending the outcome of its litigation
challenging the Department of Insurance’s determination that the
company’s current passenger automobile rates are in excess of what is
permitted under law. The March order came after an administrative law
hearing in November 2007.
"Today’s court ruling is a $250 million victory for consumers in
California and for Allstate customers." Poizner said in a statement.
Allstate representatives were not immediately available.
Poizner said many insurers have lowered auto rates under regulations
passed last year that revised guidelines under Proposition 103, which
prohibits excessive rates. Californians saved more than $700 million in
2007, he said
(BestWire, March 19, 2008).
A new study from the Consumer Federation of America identified
California as having the strongest insurance consumer protections in
the United States (BestWire, April 25, 2008). According to the report,
Californians have saved $62
billion on automobile insurance in the two decades since Proposition 103 was enacted.
Consumer Watchdog — formerly the Foundation for Taxpayer and Consumer
Rights — which joined the Insurance Department and the Attorney
General’s office in defending Poizner’s order, hailed the court
decision. "This just confirms what this morning’s report concludes:
that Proposition 103 regulation of insurance companies has saved
California consumers hundreds of dollars each year in their auto
insurance alone," Consumer Watchdog founder Harvey Rosenfield said in a
statement.
The Competitive Enterprise Institute, which conducted its own study of
state insurance regulation, disputed the CFA study, calling it flawed
and saying it failed to account for the overall cost of insurance. The
CEI study gave California a "F" grade, labeling it among the states
whose "regulatory climates are hostile to insurers as well as
consumers."
Allstate Insurance Group currently has a Best’s Financial Strength Rating of A+ (Superior).
In 2006, the top five writers of private passenger auto insurance in
California, based on A.M. Best Co. state/line data, were: State Farm
Group, with 12.7% market share; Mercury General Group, with 9.7%;
Farmers Insurance Group, with 9.7%; Auto Club Enterprises Insurance
Group, with 9.4%; and Allstate Insurance Group, with 9.3%.
Contact the author Sean P. Carr, senior associate editor, at: [email protected]
