Calif. Commissioner could seek Allstate refunds

California Insurance Commissioner Steve Poizner announced that he will seek refunds for Allstate customers if the Department of Insurance determines that the company’s rates are excessive.

In May, the insurer announced it would stop writing new homeowners and landlord package polices in California beginning July 1. At the time of the announcement, Commissioner Poizner issued an Order to Show Cause requiring Allstate to demonstrate that its rates are not excessive. In Sept. 2006, Allstate filed a 12 percent increase homeowners insurance rating plan now pending with the California Department of Insurance, which it said would help it better prepare for natural disasters in California.

“I am drawing a line in the sand,” Poizner said. “If I find that Allstate’s rates are excessive, refunds will occur. I will take clear and decisive action to protect consumers.”

The DOI noted that several insurers have lowered rates in the past year equaling savings of $1 billion for consumers in 2006, in contrast to Allstate, which prompted the Order to Show Cause.

Proposition 103 prohibits excessive rates and directs the Insurance Commissioner to take necessary steps to lower them when excessive.

Meanwhile, since Allstate’s announcement to stop writing new homeowners, others insurers such as Safeco and Farmers Insurance have said they will be expanding their presence in California.

“California remains one of our key markets,” said Mike Hughes, Safeco’s executive vice president for insurance operations. “Not only do we remain committed to our existing customers throughout the state but, with our more than 1,700 independent agents in California, we are determined to expand our presence there.” In particular, he said Safeco would be active in the homeowners market.

To view a copy of Allstate’s Order to Show Cause, visit www.insurance.ca.gov/0400-news/0100-press-releases/0060-2007
/upload/Order _Allstate_PA200700011_05_23_07.pdf

Topics California Homeowners