30% Rate Hike Faces Mandatory Proposition 103 Hearing at Department of Insurance
Santa Monica, CA — The non-profit Foundation for Taxpayer and Consumer Rights (FTCR) has challenged a 29.8% rate hike proposed by Safeco Insurance Company on its California earthquake policies. The proposed increase would amount to a total increase of approximately $9.5 million dollars statewide, or $175 per policyholder. Safeco, the sixth-largest private earthquake insurer in California, would be charging excessive premiums to its policyholders if the rate increase were allowed, according to FTCR.
“Safeco customers must be protected from this unnecessary premium hike,” said consumer advocate Douglas Heller, the Executive Director of FTCR. “With so many Californians uninsured for earthquake damage, allowing Safeco to overcharge homeowners for quake coverage will only ensure that more Californians are unprotected when the next temblor strikes.”
Under California’s Proposition 103, insurers must first seek the approval of the Insurance Commissioner before raising or lowering insurance rates. Any member of the public can challenge any company’s request to change rates. FTCR has frequently used the initiative statute to successfully challenge homeowners insurance rate increases in the past. FTCR recently blocked a 9.5% rate hike by California Casualty Insurance Company, saving California policyholders $3.2 million and a proposed 21.3% proposed hike on 40,000 mobile home owners by State Farm, providing an average annual savings of $130 to these State Farm customers.
The Commissioner announced last week that, in response to FTCR’s petition, the Department of Insurance will hold a regulatory hearing on Safeco‘s 29.8% proposed hike, in accordance with the 1988 voter-approved initiative Proposition 103. A hearing date has not yet been set.