Friday, April 25, 2008

California Commissioner Responds to Allstate Decision

California Insurance Commissioner Steve Poizner issued the following statement on the Superior Court's decision to deny Allstate's request to stay a rate order to decrease Allstate auto insurance rates by 15.9 percent:

"Today's court ruling is a $250 million victory for consumers in California and for Allstate customers. The court rejected Allstate's efforts to delay immediate savings to consumers pending the court action Allstate brought challenging the Department's determination after a hearing that Allstate's existing passenger automobile rates are 15.9 percent in excess of what the law permits.

"I will continue to fight to ensure that insurance rates in California are not excessive and when rates are found to be excessive, I will work aggressively to ensure that those rates are lowered."

In March, Poizner announced a 15.9 percent decrease in auto insurance rates for customers of Allstate Insurance Company and Allstate Indemnity Company. This $244,672,212 reduction was the result of months of negotiations and an administrative hearing, which began with Allstate requesting no change to their auto insurance rates, and mirrors reductions made by other major auto insurers. Allstate's request was denied

Allstate's customers will reportedly save on average approximately $124 per year.

The administrative law judge agreed with the California Department of Insurance (CDI) claim that Allstate's rates should be reduced significantly because they were overly excessive to begin with. Many insurers in California have significantly lowered auto insurance rates for their policyholders. In 2007, Californians saved more than $700 million through reduced auto insurance rates.

CDI maintains that Allstate should be held to the same standard as other auto insurers, based on data submitted to the department. In October 2007, Poizner approved $100 million in reduced auto insurance rates for AAA of Northern California. In July 2007, he approved a $65.8 million reduction for GEICO customers.

Allstate Indemnity Company is the fifth largest auto insurer in California; Allstate Insurance Company is ranked ninth. Collectively, they earned $1.7 billion in auto premiums for insuring approximately 2 million vehicles in 2007. Allstate has nearly 9 percent of California's auto insurance market.

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