California Court Denies Allstate’s Request to Avoid $250 Million Rate Reduction

Loading...

Thanks! Share it with your friends!

You disliked this video. Thanks for the feedback!

Loading...
Added by admin
0 Views

A San Francisco judge has refused Allstate’s request to block a 15.9 percent automobile insurance rate decrease. According to the California Department of Insurance, the rate decrease should take effect immediately, and will result in approximately $250 million in savings for Allstate customers, or about $124 per year.

In March, 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. The $244 million reduction was the result of 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, CDI said. Allstate’s request was denied.

The administrative law judge agreed with CDI’s claim that Allstate’s rates should be reduced significantly because they were overly excessive to begin with. Many insurers in California have significantly lowered auto insurance rates for their policyholders. In 2007, Californians saved more than $700 million through reduced auto insurance rates, CDI indicated.

CDI maintained 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 in reduced auto insurance rates for AAA of Northern California. In July 2007, he approved a $65.8 million reduction for GEICO customers.

“I will continue to fight to ensure that insurance rates in California are not excessive and when rates are found to be excessive, I will work aggressively to ensure that those rates are lowered,” Poizner said.

Had Allstate’s request for a stay been granted, consumer advocacy group Consumer Watchdog predicted that Allstate would have overcharged its customers at the rate of approximately $670,334 per day. “These rate reductions came about because of regulations that limit industry excesses, and Allstate’s custoemrs deserve their rate decreases now, not two years from now,” said Pamela Pressley, litigation director for the group.

Consumer Watchdog joined with the DOI and Attorney General’s office to defend the rate cut in court. The group argued that Allstate’s rates should be lowered by 19.4 percent according to the rules of Proposition 103.

However, Allstate had argued that a smaller decrease of 8.4 percent was more appropriate, given the company’s economic conditions in California.

According to CDI, Allstate Indemnity Co. is the fifth largest auto insurer in California; Allstate Insurance Co. is ranked ninth. Collectively, the companies 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.

Sources: CDI, Consumer Watchdog


Source
Category
Misc

Post your comment