State Farm has agreed to reduce the average overall rates it charges California’s wholesale, retail, and service businesses by 4.0% after it was challenged by Consumer Watchdog for proposing rate increases on businesses' liability and property insurance.
The insurer also agreed not to raise the rates paid by professional offices.
According to a release by Consumer Watchdog, its efforts have helped more than 80,000 policyholders save $7.8 million from paying the increased rates State Farm requested. The California Department of Insurance has approved the rate decreases.
Qualifying policyholders looking to purchase a new policy and those who are renewing policies that have been issued after Nov. 15, 2016 will be eligible for the rate decreases.
"State Farm has tried to impose excessive rates for millions of policyholders in the past several years," commented Consumer Watchdog staff attorney Jonathan Phenix. "Large and small business owners in California will now get a $7.8 million break from these overcharges, and we're hopeful that other State Farm policyholders will soon get the rate reductions and refunds they deserve."
Originally, State Farm planned average overall rate increases of 5% or wholesale, retail, and service businesses, and 5.5% for professional offices.
Consumer Watchdog analyzed the insurer’s data and discovered a number of errors with State Farm’s methodology. Such errors included misjudging costs for disasters such as wildfires and poorly assessing insurance losses and premium revenue. With this knowledge, the consumer advocate group challenged State Farm’s proposed rate hikes on April 20, 2016 under the voter-passed insurance reform initiative Proposition 103.