The California Department of Insurance (CDI) has said yes to Allstate’s request for a 4% homeowners insurance rate hike. That’s maybe too late since a couple of weeks ago the insurer announced it will no longer be writing homeowners policies in the Golden State.
The CDI is also looking at another Allstate proposed rate increase of 40%.
That request drew the attention — and the ire — of California’s Consumer Watchdog. Spokesman, Harvey Rosenfield said it’s currently reviewing Allstate’s request that it says will cost California homeowners an additional $196 million a year.
Rosenfield’s group also is being highly critical of the 4%. He and Consumer Watchdog say Allstate misled the CDI over its decision to no longer write homeowners policies in California.
Thus, Consumer Watchdog wants Allstate to prove to the CDI that it is entitled to that increase. Besides — Rosenfield added — Allstate says it’s leaving the California homeowners market so why the need for a rate increase?
“By not requiring Allstate to show the impact of its withdrawal on rates, the commissioner is approving a rate increase that has not been justified, a violation of California law,” Rosenfield said.
CDI’s Gabriel Sanchez said Rosenfield’s assertions are not factual, nor are they based on any California laws.
“Allstate’s action in November 2022 was reported in industry trade publications at the time, and California law does not require prior approval when a company pauses new policies,” Sanchez noted. “Our department’s rate regulation experts carefully review all insurance company rate filings to protect Californians from unjustifiably high rates.”
As for Allstate, it says it applied for the 4% rate jump in April. That’s way ahead of the decision to stop selling homeowners in California. The company also criticized California’s Proposition 103 — which was authored by Rosenfield and made law in 1988 — for making it very, very hard for an insurer to change or adjust rates.
Proposition 103 requires companies to get approval from the California Department of Insurance before it can raise rates.
Source link: Insurance Business America — https://bit.ly/46aMobB