California’s Department of Insurance held hearings yesterday on Allstate Insurance Co.’s auto rates in San Francisco.
The consumer group Foundation for Taxpayer and Consumer Rights argued that the company is overcharging drivers $300 million per year, and that it should lower its rates by 18.8 percent, or an average $150 per car, under rules that limit excessive profits by the industry. The group also will be challenging Allstate’s proposed 12 percent increase in homeowners premiums, which will be discussed at a separate hearing in January 2008.
FTRC said it objected to Allstate’s request for five exeptions to the rules that determine auto insurance rates, despite the company’s above-average profitability and shareholder return.
Allstate indicated it had already filed to reduce its rates. The company withdrew its request to charge drivers an additional $15.5 million in premiums based upon its claims of “improving the customer experience.” However, FTCR indicated the allegedly improved service efforts were a “bluff,” considering “the company’s own internal poll showed that the company has consistently fallen below the industry average for customer satisfaction since at least the year 2000,” the group said in a statement.
The hearing is expected to last three to five days.
Source: FTCR, DOI
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