State Investigates Allstate Home Insurance Policies
There Could Be Price Gouging Involved
May 23 – KGO – The state of California is investigating Allstate
insurance company to see if it gouged homeowners with excessive
Steve Poizner, (R) Insurance Commissioner: "We do have reasons to believe that their rates are excessive."
Allstate’s recent request to raise homeowner’s insurance rates
by 12-percent made California Insurance Commissioner Steve Poizner
Today, he ordered the company to prove it’s not already overcharging
its nearly one million homeowners, at a time when other companies
dropped rates by as much as 20-percent.
Steve Poizner, (R) Insurance Commissioner: "When all the major
competitors in California are significantly reducing their rates double
digits, to the tune of a over a billion dollars in the last year …
when that happens, then Allstate, as a lone ranger, is moving their
rates up in the opposite direction, that gives me reason to be very
Allstate says its rates were competitive enough to write 50,000 new homeowners policies last year.
Pete Moraga, Allstate Insurance: "The last time we asked for a rate
increase, the Department of Insurance approved that rate increase. So
we are operating under business that was approved by the Department of
The rate investigation comes less than two weeks after Allstate
determined this disaster-prone state has become too risky, and has
forced them to stop writing policies for new customers.
The state’s third largest home insurer says it needs to protect its assets for existing customers.
Pete Moraga again: "In spite of the fact that we had the worst fire
season in 2003, we didn’t raise our rates. Other companies raised their
rates at the time."
Although Allstate can defend itself in an upcoming hearing, consumer
groups say the state will almost surely rule against the company
because less than 40-cents of every premium dollar collected went to
pay off claims.
The state could order portions of premiums refunded to Californians, something that’s never happened before.
Richard Holober, Consumer Federation of California: "We’re looking perhaps as much as half of the amount they’re charging as pure robbery."
If the Department of Insurance does find Allstate’s rates to be
excessive, the refund checks could be in the mail by the end of the