Allstate Insurance, which insures 2.1 million drivers in California, Plans to raise premiums by 6.9 percent–a move that could force other companies to do the same, according to an article published yesterday in The Los Angeles Times.
The increase is scheduled to take effect May 18. Rate changes of less than 7 percent do not require a hearing before the state Department of Insurance.
Allstate blamed the increase on a rise in the number and severity of accidents for the increase–which would add roughly $48 to an annual $700 premium. Insurers and analysts predict that this move by Allstate will most likely prompt more companies to boost their rates.
In fact, last November, Woodland Hills-based 21st Century Insurance increased its rates 6.8 percent, and the company has requested an additional 5 percent hike to take effect next month, according to 21st Century spokesman Ric Hill.
Larger companies are also feeling the pressure. Allstate recently boosted premiums for nonstandard drivers, and Mercury Insurance is planning a 6.5 percent increase for its nonstandard drivers, according to Bruce Norman, Mercury’s senior vice president of marketing.
Last spring, analysts said the California price war had gone too far. With announcements such as Allstate’s, it looks as if the “how low can you go” mentality is finally hitting bottom.
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