Consumer Federation Applauds Commissioner Poizner’s Allstate Order
The Consumer Federation of California today applauded Insurance
Commissioner Steve Poizner’s order against Allstate for overcharging
Californians for homeowners insurance. Commissioner Poizner ordered
Allstate to prove that their rates are not excessive and stated that he
would order retroactive refunds to consumers if he determines that
homeowners were overcharged. Allstate is California’s third largest
home insurance provider with 900,000 homeowner policies.
‘Allstate is ripping off California homeowners. We applaud Commissioner
Poizner for calling Allstate on the carpet,’ stated Richard Holober,
Executive Director of the Consumer Federation of California. ‘Allstate
owes refunds to nearly a million homeowners. We salute Commissioner
Poizner’s bold action to protect consumers.’
On May 10, Allstate announced that it was no longer writing new
home insurance policies in California. Earlier, the company applied for
a 12 percent increase in homeowner premiums. Late last year, other
major home insurance companies reached an agreement with the Insurance
Commissioner to lower their rates. State Farm lowered its rates by 20%,
Farmers, AAA, Safeco and other major homeowner carriers also agreed to
big rate cuts.
Allstate made profits of $5 billion in 2006. First quarter 2007
profits were $1.5 billion. Allstate CEO Edward M. Liddy’s 2006
compensation was $24 million.
In 2005 and 2006, Allstate paid out in claims less than 40
cents of every California premium dollar. The company pocketed over 60%
of homeowner premiums.
‘Insurance companies should earn a reasonable rate of profit, but
Allstate is engaging in highway robbery.’ Holober said. ‘Allstate paid
its CEO 24 million dollars last year while ripping off California
homeowners. Greed of this magnitude must be stopped.’
The Consumer Federation of California is a non’profit consumer advocacy organization established in 1960.