California Insurance Commissioner Dave Jones has issued a noncompliance notice to State Farm and — if it goes through — it’s going to be expensive. This all comes from a December of last year order when Jones told the company to cut rates for homeowners and renters.
All this came about after the company asked for a 6.9% hike. Jones said the 6.9% is excessive and said reductions, not increases are in order. So, he told State Farm to drop rates for:
• Homeowners by 5.37%
• Renters by 20.39%
• Condominium by 13.81%
The cuts save $84 million for policyholders. Jones also instructed State Farm to issue refunds so the total of the reductions and refunds hit $110 million.
In December State Farm tried to get a San Diego Superior Court judge to stay the order for the reductions. The court refused and said delaying is against the public interest. So, the rate reduction is a go.
State Farm told the commissioner’s staff that it will not implement the rate reduction order immediately. It will happen on February 13th of this year.
In a statement, the company said, “State Farm believes it is in full compliance with the California Department of Insurance rate making process. We took immediate steps to comply with the rate reduction after receiving the ruling of the trial court over the weekend of December 16. The new reduced rates currently are and, after that weekend, have been included in outgoing renewal bills, which must be sent out by law at least 45 days in advance.”
Jones’ original order was on December 6, 2016. The court said no on December 16th.
The pace of the State Farm’s compliance is not sitting well with Jones. He has proposed fines that could top $2.5 billion. The commissioner has sent legal notice to State Farm stating it faces a $10,000 penalty for each act of overcharging of policyholders.
Source link: Insurance Journal, Insurance Business America