Associated Press
LOS ANGELES, CA — California Insurance Commissioner Steve Poizner Wednesday challenged the rates Allstate Corp. charges consumers for homeowner’s insurance and said he would order the company to refund premiums if a hearing substantiates those claims.
Poizner said that while other insurers have lowered rates for homeowner’s coverage by between 10 percent and 18 percent, Allstate has applied for a 12 percent rate hike. The company also recently announced it would not write new policies in California because of losses from wildfire and other claims.
In an order compelling Allstate to justify its rates, the state said a preliminary analysis of claims data suggests rates should be reduced by 43.88 percent.
“I am drawing a line in the sand,” Poizner said. “If I find that Allstate‘s rates are excessive, refunds will occur.”
The company denied the allegation, saying the current rates were approved by the state insurance department in 2003 and “are competitively priced.”
More than 50,000 residents took out new coverage in 2006, noted Rich Halberg, the company’s California spokesman.
The company is seeking its first rate increase in almost four years to more accurately reflect the cost of providing the coverage, Halberg said.
A hearing must now be held to determine whether the company’s rates are excessive and should be reduced.
Allstate was also criticized Wednesday by the Foundation for Taxpayer and Consumer Rights, which said the company has been overcharging residents by $326 million a year.
The group called for a 40 percent reduction in rates under Proposition 103, which it says would result in average individual savings of about $362 a year.
