California Insurance Commissioner Steve Poizner announced a 15.9 percent decrease in auto insurance rates for customers of Allstate Insurance Co. and Allstate Indemnity Co. This $244 million reduction culminates months of negotiations and an administrative hearing, which began with Allstate requesting no change to their auto insurance rates, and mirrors reductions made by other, major auto insurers, the Commissioner’s office said.
The average annual savings per auto is approximately $124. This decision takes effect on April 14, 2008.
“California’s consumers deserve a competitive marketplace in which to shop around for the best rates that meet their needs,” said Commissioner Poizner. “This reduction reaffirms my commitment to ensuring that excessive rates are not charged to California consumers. At the same time, the rate reduction is fair and reasonable for the company.”
The administrative law judge agreed with the California Department of Insurance (CDI) claim that Allstate’s rates should be reduced significantly because they were overly excessive to begin with. Many insurers in California have lowered auto insurance rates for their policyholders. In 2007, Californians saved more than $700 million through reduced auto insurance rates, CDI said.
CDI maintains that Allstate should be held to the same standard as other auto insurers, based on data submitted to the department. In October 2007, Commissioner Poizner approved $100 million is reduced auto insurance rates for AAA of Northern California. In July 2007, he approved a $65.8 million reduction for GEICO customers.
Allstate Indemnity Co. is the fifth largest auto insurer in California; Allstate Insurance Co. is ranked ninth. Collectively, they earned $1.7 billion in auto premiums for insuring approximately 2 million vehicles in 2007. Allstate has nearly 9 percent of California’s auto insurance market.
“In an economy that is wreaking havoc on consumers’ bottom line, Allstate’s rate cut can be positively perceived as a $250 million stimulus package as it will provide much needed relief to nearly two million of its California customers,” said Daniel Y. Zohar with the Los Angeles, CA. based Zohar law firm, and co-counsel for the consumer group Foundation for Taxpayer and Consumer Rights. “With everyone having to tighten their belts, we are pr oud that our advocacy on behalf of consumers has helped to ensure that Allstate tightens it belt, too.”
Sources: CDI, FTCR