Across the country, the largest and best-known personal lines insurance carriers are doing battle with regulators to gain approval for large premium jumps in auto and home insurance.
Most recently, consumer groups in California have urged the Department of Insurance to reduce its rates by at least 9.26%. According to Consumer Watchdog, the homeowners insurer – the largest in the state – has overcharged its customers by roughly $78 million, or $285,000 per day, since at least July 2015.
State Farm is in the process of requesting rate increases through the department that would see homeowners charged $94 million in the coming year than they do under current rates. Consumer Watchdog, however, says this would mean the insurer would be charging $198 million more a year than is legal.
“An analysis of State Farm’s financial operations under California’s insurance rules, supported by evidence introduced at the trial, confirms that the company’s current rates are excessive and illegal, and that a rate decrease of 9.26% is required, which would save policyholders $104 million annually,” the group said in a recent press release.
State Farm, meanwhile, alleges that it cannot afford to reduce its rates and that forcing such a reduction would be a violation of constitution rights.
The news comes weeks after a similar report affecting Allstate across the country.
In Georgia, the insurer has filed a statewide automobile rate increase of 25% that would be implemented May 22. State Insurance Commissioner Ralph Hudgens has warned policyholders of the request, stressing that the 25% hike is just an average. Many policyholders may see a rate change as high as 58.3%.
Hudgens directed the Georgia Department Staff to initiate an examination of the carrier’s filing to determine if it acceptable under state law. If the results show the increase is not justified, Hudgens says he will work to protect policyholders.
“I’m the insurance commissioner and my job is to protect the consumer, the policyholder,” Hudgens told local station WRBL. “I’m not there to protect the insurance company. I’m there to protect the Georgia citizens.”
Losses in the personal lines sectors have indeed been high, as storms ravage the country and low gas prices have prompted an increase in auto accidents.
Yet insurance agents say the rate increases requested by the nation’s carriers are unlike anything they have seen.
“Most companies don’t do it all at one time,” said Terry Wiggins, owner of Wiggins Insurance Agency in Georgia. “They’ll do three, four, five percent a year until they get to the point where the ratios are back in line.”