California’s largest homeowners insurance company has requested at 10.6 percent reduction in homeowners’ insurance rates for its 1.2 million policyholders in California, according to the Department of Insurance. The average policyholder would save $103 annually.
The decision to lower rates is in sharp contrast to Allstate Insurance Co.’s announcement last week to seek at 12.2 percent rate increase in homeowners’ rates, Commissioner John Garamendi said.
“This is good news for State Farm policyholders and for all California insurance consumers,” he said. “As more large companies file for decreases, others will be forced to follow suit in order to compete.”
In June, the Commissioner ordered Allstate, State Farm, Farmers Insurance and Safeco Insurance to justify their rates, following a Department study that noted four of California’s largest homeowners’ insurers were paying far less than 50 centes of each premium dollar to settle policyholder claims. The four insurers account for 51 percent of the California homeowners’ insurance market.
The study, “Lower Claims, Higher Profits: Where Do Your Premium Dollars Go?” noted insurers have experienced historically low loss ratios in the past two years, according to CDI. Thus, Garamendi ordered the four insurers to provide data showing its current rates were not excessive.
State Farm’s rate reduction filing will be reviewed by the Department before approval is given.
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