2 Million California Consumers Will Share in Savings

Santa Monica, CA -- Yesterday, Allstate (NYSE: ALL) dismissed its appeal of the $250 million in auto insurance rate reductions for California consumers ordered by Insurance Commissioner Steve Poizner in March. The reductions were the result of extensive hearings under Proposition 103 at the Department of Insurance, where Consumer Watchdog, which had intervened in the hearings on behalf of the public and two million Allstate auto policyholders, successfully blocked Allstate’s efforts to charge a higher rate.

Consumer Watchdog applauded the dismissal of the lawsuit Allstate brought in April in an attempt to block the rate reduction order.  Said Los Angeles attorney Dan Zohar of the Zohar Law Firm, P.C., lead outside counsel for Consumer Watchdog, “With gas prices soaring and the economy on thin ice, it’s about time that California drivers got some good news.  Allstate had no proper legal basis for the appeal, and having had a chance to consider their options, they correctly decided to dismiss the challenge to Poizner’s order.”
 
Consumers should see the reductions implemented on all policies renewed
on or after April 28, 2008. The average annual policy premium will be
reduced approximately $124.  If policyholders do not see the reduction
on their renewal notice, they should contact their Allstate agent and,
if necessary the California Department of Insurance consumer complaint
line at (800) 927-HELP (4357).

“Whether it’s insurance for automobile, homeowners, or earthquake
coverage, Consumer Watchdog will continue to keep insurers in check,”
said Pam Pressley, Consumer Watchdog’s litigation director.  “The
Allstate rate order should serve as a message to all carriers that if
they want to do business in California, consumers must be charged a
fair rate, not be forced to pay for insurers’ excessive profits.”

In addition to the successful challenge to Allstate’s auto rates,
Consumer Watchdog also challenged Allstate’s proposed rate increase for
its one million California homeowners. Hearings on the homeowner
insurance rates were held in January 2008, and a decision by Poizner is
expected sometime this summer.  Allstate has proposed to increase its
homeowners insurance rates by 9% (about $79 million per year), but
Consumer Watchdog is calling for a 30% rate cut, which would provide a
premium decrease of about $250 per homeowner.

Regulators and consumer advocates have the ability to challenge unfair
insurance rates in California under the state’s landmark insurance
reform initiative, Proposition 103, which bans excessive profit and
requires insurance companies to open the books and justify rates to
state regulators and the public. An April 2008 report by Consumer
Federation of America calculates that Californians have saved $62
billion on auto insurance alone in the twenty years since Proposition
103 was enacted. Read the report here.

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Consumer Watchdog is a nonpartisan, nonprofit organization.