Santa Monica, CA -- Responding to multiple challenges to its excessive homeowners insurance rates brought by Consumer Watchdog over the last two years, Allstate has agreed to reduce its homeowners rates by 12.6% overall, effective February 1, 2016. Policyholders will save nearly $72.5 million as a result, with the average annual savings estimated at $230 per policy.
"When the amount they pay out in claims plummets, and their profits soar, insurance companies are required by voter-approved Proposition 103 to lower the rates they charge to consumers," said Pam Pressley, Consumer Watchdog Senior Staff Attorney. "Even though claims have gone down over the last five years, Allstate had failed to reduce its rates accordingly. That's why Consumer Watchdog demanded a hearing, and the company agreed to reduce its rates."
Under Proposition 103, insurance companies are barred from charging excessive auto, home and business rates, and consumers have the right to request a public hearing to challenge rates. Consumer Watchdog has used the public participation process under Proposition 103 to save auto, home and medical malpractice insurance policyholders over $3 billion since 2003. Proposition 103 has saved motorists alone over $100 billion since its passage in 1988, according to a 2013 report by the Consumer Federation of America.
Consumer Watchdog first discovered that Allstate was overcharging consumers in 2014 when it conducted a market analysis of the renters and homeowners insurance rates Allstate charged consumers between 2010 and 2013. Consumer Watchdog petitioned the Department of Insurance in July 2014 to take action by holding a hearing on Allstate's current homeowners rates as excessive in violation of Proposition 103. Though the Department declined to hold a hearing, Allstate was told to justify its rates by making a rate filing.
In May 2015, Allstate filed the 6.6% overall rate decrease. After independently analyzing data underlying Allstate's proposed rate decrease, Consumer Watchdog found it was not nearly enough and filed another petition for hearing.
After negotiations with Consumer Watchdog and the Department of Insurance, Allstate ultimately agreed to a deeper cut to its rates. Allstate will reduce overall rates by 12.6% effective February 1, 2016. Eligible policyholders who renew in February will get these savings immediately, and eligible policyholders who already renewed this month will get refunds.
"California homeowners are finally getting an overdue rate cut from the $72 million a year they were overpaying for their Allstate insurance coverage," said Consumer Watchdog Executive Director Carmen Balber.
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